McKesson (NYSE:MCK) is a large cap company that operates within the health care providers and services industry. Its market cap is $30 billion today and the total one-year return is 2.87% for shareholders.
McKesson stock is underperforming the market. It's beaten down, but it reports earnings soon. So is it a good time to buy? To answer this question, we've turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics:
✓ Earnings-per-Share (EPS) Growth: McKesson reported a recent EPS growth rate of 50.17%. That's above the health care providers and services industry average of 21.85%. That's a great sign. McKesson's earnings growth is outpacing competitors.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the health care providers and services industry is 33.17. And McKesson's ratio comes in at 18.45. It's trading at a better value than many of its competitors.
✓ Debt-to-Equity : The debt-to-equity ratio for McKesson stock is 65.59%. That's below the health care providers and services industry average of 67.17%. That's a good sign. McKesson's debt levels are not out of control.
✗ Free Cash Flow per Share Growth : McKesson has decreased its FCF per share over the last year relative to its competitors. That's not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth.
✓ Profit Margins : The profit margin of McKesson comes in at 1.68% today. And generally, the higher, the better. We also like to see this ratio above competitors. McKesson's profit margin is above the health care providers and services average of -2.93%. So that's a positive indicator for investors.
✓ Return on Equity : Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for McKesson is 49.43% and that's above the industry average ROE of 13.13%.
McKesson stock passes five of our six key metrics today. That's why our Investment U Stock Grader gives it a Strong Buy.