McKesson Corporation Fundamental Analysis (NYSE: MCK)
McKesson Corporation (NYSE: MCK) shows moderate financial fundamentals with a PE ratio of 22.58, profit margin of 1.12%, and ROE of -1.94%. The company generates $405.4B in annual revenue with strong year-over-year growth of 16.22%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of -110.3/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze MCK's fundamental strength across five key dimensions:
Efficiency Score
WeakMCK struggles to generate sufficient returns from assets.
Valuation Score
ExcellentMCK trades at attractive valuation levels.
Growth Score
ExcellentMCK delivers strong and consistent growth momentum.
Financial Health Score
ModerateMCK shows balanced financial health with some risks.
Profitability Score
WeakMCK struggles to sustain strong margins.
Key Financial Metrics
Is MCK Expensive or Cheap?
P/E Ratio
MCK trades at 22.58 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, MCK's PEG of 0.46 indicates potential undervaluation.
Price to Book
The market values McKesson Corporation at -23.73 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 12.97 times EBITDA. This signals the market has high growth expectations.
How Well Does MCK Make Money?
Net Profit Margin
For every $100 in sales, McKesson Corporation keeps $1.12 as profit after all expenses.
Operating Margin
Core operations generate 1.62 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-1.94 in profit for every $100 of shareholder equity.
ROA
McKesson Corporation generates $5.20 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
McKesson Corporation generates limited operating cash flow of $6.76B, signaling weaker underlying cash strength.
Free Cash Flow
McKesson Corporation generates weak or negative free cash flow of $6.10B, restricting financial flexibility.
FCF Per Share
Each share generates $52.11 in free cash annually.
FCF Yield
MCK converts 6.23% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
22.58
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.46
vs 25 benchmark
P/B Ratio
Price to book value ratio
-23.73
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.24
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
-2.76
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.89
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-1.94
vs 25 benchmark
ROA
Return on assets percentage
0.05
vs 25 benchmark
ROCE
Return on capital employed
0.37
vs 25 benchmark
How MCK Stacks Against Its Sector Peers
| Metric | MCK Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 22.58 | 31.19 | Better (Cheaper) |
| ROE | -194.39% | 447.00% | Weak |
| Net Margin | 1.12% | 21592.00% | Weak |
| Debt/Equity | -2.76 | 0.54 | Strong (Low Leverage) |
| Current Ratio | 0.89 | 5.66 | Weak Liquidity |
| ROA | 5.20% | -52.00% (disorted) | Weak |
MCK outperforms its industry in 2 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews McKesson Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
120.78%
Industry Style: Defensive, Growth, Innovation
High GrowthEPS CAGR
420.14%
Industry Style: Defensive, Growth, Innovation
High GrowthFCF CAGR
97.65%
Industry Style: Defensive, Growth, Innovation
High Growth