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This Medical Supplier Is Pushing All-Time Highs

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It’s undoubtedly been a challenging year in the market year-to-date, with all of the major indexes in the red. Coming out of a once-in-a-lifetime pandemic has certainly landed us in an interesting economic environment.

Nonetheless, the market continues to roll on.

Amidst the sea of red, there are still quite a few stocks out there in the green year-to-date, such as McKesson MCK.

Located in Texas, McKesson is a healthcare services and information technology company that operates through two segments – Distribution Solutions and Technology Solutions. In addition, the company played a vital role in the distribution of COVID-19 vaccines, ancillary supply kids, and tests.

MCK is a Zacks Rank #2 (Buy) with an overall VGM Score of an A. In addition, shares have been pushing their way to all-time highs, undoubtedly a major positive.

Let’s examine the company a little closer in order to see if MCK fits your investing style.

Share Performance

McKesson shares have been scorching-hot year-to-date, increasing by more than 30% in value and extensively outperforming both its Zacks Sector and the S&P 500.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

In fact, the price action has been stellar for some time; MCK shares have soared over 70% in the last year, crushing the S&P 500 and its Zacks Sector in this timeframe as well.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Quarterly Performance

McKesson has consistently beaten bottom-line estimates, registering nine EPS beats out of its last ten quarterly reports. Over its last four quarters, the company has exceeded EPS estimates by an average of a double-digit 20%.

In addition, quarterly revenue results have also been rock-solid; MCK has exceeded top-line estimates in eight of its last ten quarters. McKesson generated $66.1 billion in revenue in its latest quarter, good enough for a 4% top-line beat.

Analysts have modestly upped their earnings outlook across all timeframes over the last 60 days.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Dividends & Valuation

Investing for an income stream is a popular way to balance out a portfolio. Fortunately for those seeking income, MCK has that covered with its annual dividend that yields 0.6% and a payout ratio sitting sustainably at 8% of earnings.

Furthermore, the company has been dedicated to rewarding its shareholders; MCK has increased its dividend five times over the last five years and has a five-year annualized dividend growth rate of a solid 7.2%.

The chart below illustrates McKesson’s dividend yield vs. its Zacks Sector.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

McKesson also sports attractive valuation metrics, further displayed by its Style Score of A for Value. The company’s forward earnings multiple resides at 14.1X, nowhere near its Zacks Sector’s average, reflecting an enticing double-digit discount of 32%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Bottom Line

McKesson has been firing on all cylinders, consistently reporting top and bottom-line results above expectations. In addition, the company carries a Zacks Rank #2 (Buy) with an overall VGM Score of an A, making shares appear even more appealing.

The strong share performance, consistent dividend growth, and rising estimate revisions instill a high level of confidence in share appreciation moving forward.

If MCK doesn’t fit your investing style, another stock operating within the same sector, AMN Healthcare Services AMN, might be what you’re looking for. AMN is a Zacks Rank #1 (Strong Buy) with an overall VGM Score of a B.

In addition, analysts have upped their earnings outlook across all timeframes.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

AMN is forecasted to register double-digit growth in earnings of nearly 30% year-over-year in FY22. Furthermore, the company has impressively registered top and bottom-line beats in nine consecutive quarters.


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McKesson Corporation (MCK) : Free Stock Analysis Report
 
AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report
 
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