Should Value Investors Buy McKesson (MCK) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on 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 P/E ratio of 14.93 right now. For comparison, its industry sports an average P/E of 18.75. Over the last 12 months, MCK's Forward P/E has been as high as 15.66 and as low as 12.75, with a median of 14.44.
Investors should also note that MCK holds a PEG ratio of 1.40. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MCK's industry currently sports an average PEG of 1.49. Over the last 12 months, MCK's PEG has been as high as 1.56 and as low as 1.23, with a median of 1.38.
Finally, we should also recognize that MCK has a P/CF ratio of 13.10. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 23.26. MCK's P/CF has been as high as 23.66 and as low as 11.52, with a median of 13.51, all within the past year.
Investors could also keep in mind Patterson Companies (PDCO), an Medical - Dental Supplies stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Patterson Companies is trading at a forward earnings multiple of 13.36 at the moment, with a PEG ratio of 1.45. This compares to its industry's average P/E of 18.75 and average PEG ratio of 1.49.
PDCO's Forward P/E has been as high as 13.74 and as low as 10.21, with a median of 11.74. During the same time period, its PEG ratio has been as high as 1.90, as low as 1.26, with a median of 1.53.
Furthermore, Patterson Companies holds a P/B ratio of 2.91 and its industry's price-to-book ratio is 7.04. PDCO's P/B has been as high as 2.93, as low as 2.25, with a median of 2.55 over the past 12 months.
These are just a handful of the figures considered in McKesson and Patterson Companies's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MCK and PDCO is an impressive value stock right now.
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McKesson Corporation (MCK) : Free Stock Analysis Report
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
