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McKesson (MCK) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3-min read

In the latest trading session, McKesson (MCK) closed at $329.53, marking a +1.02% move from the previous day. This move lagged the S&P 500's daily gain of 1.06%. Meanwhile, the Dow gained 1.05%, and the Nasdaq, a tech-heavy index, added 0.4%.

Prior to today's trading, shares of the prescription drug distributor had gained 2.39% over the past month. This has outpaced the Medical sector's loss of 3.76% and the S&P 500's loss of 8.3% in that time.

Investors will be hoping for strength from McKesson as it approaches its next earnings release, which is expected to be August 3, 2022. The company is expected to report EPS of $6.12, up 10.07% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $63.87 billion, up 1.91% from the prior-year quarter.

MCK's full-year Zacks Consensus Estimates are calling for earnings of $23.25 per share and revenue of $264.78 billion. These results would represent year-over-year changes of -1.86% and +0.31%, respectively.

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Any recent changes to analyst estimates for McKesson should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. McKesson currently has a Zacks Rank of #3 (Hold).

Investors should also note McKesson's current valuation metrics, including its Forward P/E ratio of 14.03. This valuation marks a discount compared to its industry's average Forward P/E of 18.77.

Meanwhile, MCK's PEG ratio is currently 1.49. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MCK's industry had an average PEG ratio of 2.13 as of yesterday's close.

The Medical - Dental Supplies industry is part of the Medical sector. This group has a Zacks Industry Rank of 182, putting it in the bottom 29% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow MCK in the coming trading sessions, be sure to utilize Zacks.com.


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