U.S. Markets closed

Is McKesson (MCK) Stock Undervalued Right Now?

  • Oops!
    Something went wrong.
    Please try again later.
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is McKesson (MCK). MCK is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 9.69, which compares to its industry's average of 16.53. MCK's Forward P/E has been as high as 10.18 and as low as 7.78, with a median of 9.07, all within the past year.

MCK is also sporting a PEG ratio of 1.39. 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 currently sports an average PEG of 1.72. MCK's PEG has been as high as 1.48 and as low as 1.13, with a median of 1.33, all within the past year.

Finally, our model also underscores that MCK has a P/CF ratio of 9.14. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. MCK's P/CF compares to its industry's average P/CF of 11.57. Over the past 52 weeks, MCK's P/CF has been as high as 9.55 and as low as 6.39, with a median of 8.12.

These are only a few of the key metrics included in McKesson's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MCK looks like an impressive value stock at the moment.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
McKesson Corporation (MCK) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research