McKesson (MCK) Suffers a Larger Drop Than the General Market: Key Insights

In the latest close session, McKesson (MCK) was down 1.21% at $880.86. The stock's performance was behind the S&P 500's daily loss of 0.59%. On the other hand, the Dow registered a loss of 0.6%, and the technology-centric Nasdaq decreased by 0.65%.

Shares of the prescription drug distributor witnessed a gain of 1.47% over the previous month, beating the performance of the Medical sector with its loss of 0.36%, and the S&P 500's loss of 1.37%.

Market participants will be closely following the financial results of McKesson in its upcoming release. The company is predicted to post an EPS of $10.75, indicating a 9.03% growth compared to the equivalent quarter last year. At the same time, our most recent consensus estimate is projecting a revenue of $110.14 billion, reflecting a 6.78% rise from the equivalent quarter last year.

MCK's full-year Zacks Consensus Estimates are calling for earnings of $44.65 per share and revenue of $429.09 billion. These results would represent year-over-year changes of +14.17% and +6.36%, respectively.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for McKesson. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-term stock moves. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional 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. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0% decrease. As of now, McKesson holds a Zacks Rank of #3 (Hold).

Digging into valuation, McKesson currently has a Forward P/E ratio of 19.97. This denotes a premium relative to the industry average Forward P/E of 17.91.

One should further note that MCK currently holds a PEG ratio of 1.77. 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. The Medical - Dental Supplies was holding an average PEG ratio of 1.77 at yesterday's closing price.

The Medical - Dental Supplies industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 77, which puts it in the top 32% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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