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

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McKesson (MCK) closed at $340.12 in the latest trading session, marking a +0.15% move from the prior day. The stock lagged the S&P 500's daily gain of 1.21%. Meanwhile, the Dow gained 1.03%, and the Nasdaq, a tech-heavy index, added 0.14%.

Coming into today, shares of the prescription drug distributor had gained 3.52% in the past month. In that same time, the Medical sector gained 0.38%, while the S&P 500 gained 3.2%.

McKesson will be looking to display strength as it nears its next earnings release, which is expected to be August 3, 2022. In that report, analysts expect McKesson to post earnings of $5.31 per share. This would mark a year-over-year decline of 4.5%. Our most recent consensus estimate is calling for quarterly revenue of $63.87 billion, up 1.91% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $23.26 per share and revenue of $264.78 billion. These totals would mark changes of -1.82% and +0.31%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for McKesson. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.05% higher within the past month. McKesson is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, McKesson is currently trading at a Forward P/E ratio of 14.6. This represents a discount compared to its industry's average Forward P/E of 21.8.

Also, we should mention that MCK has a PEG ratio of 1.53. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MCK's industry had an average PEG ratio of 2.42 as of yesterday's close.

The Medical - Dental Supplies industry is part of the Medical sector. This group has a Zacks Industry Rank of 135, putting it in the bottom 47% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. 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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