December 12, 2024
Top 10 Stock McKesson Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: McKesson – Top 10 Stock in Dow Jones U.S. Health Care Providers Index
McKesson is listed as a top 10 stock on December 12, 2024 in the market index D.J. US Health Care because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low. Based on the Obermatt 360° View of 100 (top 100% performer), Obermatt assesses an overall strong buy recommendation for McKesson on December 12, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Health Care Distributors |
| Index | Diversity USA, Recycling, SDG 10, SDG 13, SDG 3, D.J. US Health Care, S&P 500 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View McKesson Strong Buy
| 360 METRICS | December 12, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 93 |
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| GROWTH | ||||||||
| GROWTH | 89 |
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| SAFETY | ||||||||
| SAFETY | 22 |
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| SENTIMENT | ||||||||
| SENTIMENT | 100 |
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| 360° VIEW | ||||||||
| 360° VIEW | 100 |
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ANALYSIS: With an Obermatt 360° View of 100 (better than 100% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock McKesson are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for McKesson. The consolidated Value Rank has an attractive rank of 93, which means that the share price of McKesson is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 93% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 89, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 100. But the company’s financing is risky with a Safety rank of 22. This means 78% of comparable companies have a safer financing structure than McKesson. ...read more
RECOMMENDATION: With a consolidated 360° View of 100, McKesson is better positioned than 100% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 93), above-average growth (Growth Rank of 89), and positive market sentiment in the professional investor community (Sentiment Rank of 100), it is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely, unless information not publicly available. Only the company financing structure is on the riskier side (Safety Rank of 22), but that would also mean better returns for shareholders if things work out well. Good value is sometimes an indication that the company's future is challenging. If they have been growing above average and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of McKesson is as difficult as the low price of the stock, despite good growth and positive professional investor sentiment, suggests. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible right now, which may indicate good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for McKesson very positive
ANALYSIS: With an Obermatt Sentiment Rank of 100 (better than 100% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock McKesson is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for McKesson. Analyst Opinions are at a rank of 79 (better than 79% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 77, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in McKesson. The Professional Investors rank is 85, which means that currently, professional investors hold more stock in this company than in 85% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 70 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 70% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 100 (more positive than 100% compared with investment alternatives), McKesson has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean McKesson stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: McKesson Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 93 (better than 93% compared with alternatives) for 2024, McKesson shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, where three out of four indicators are above average for McKesson. Price-to-Sales (P/S) is 85 which means that the stock price compared with what market professionals expect for future sales is lower than for 85% of comparable companies, indicating a good value for McKesson's revenue size. The same is valid for the Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 100. Finally, compared with other companies in the same industry, dividend yields of McKesson are expected to be higher than for 73% of all competitors (a Dividend Yield rank of 73). The only low rank is for expected profits with a Price-to-Profit Rank of 45, indicating that the market expects the company's profit to be low despite a high dividend. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 93, is a buy recommendation based on McKesson's stock price compared with the company's operational size and dividend yields. The low Profit Rank could result from a one-off charge, for instance, for an accident, a legal settlement, or a restructuring project. If the company keeps its dividends high, the low expected profit may be transitory. If that is the case, the three good value ranks for Sales, Capital, and Dividends are reliable indicators for good stock price value, a low stock price. ...read more
Growth Strategy: McKesson Growth Momentum high
| GROWTH METRICS | December 12, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 76 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 55 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 75 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 73 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 89 |
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ANALYSIS: With an Obermatt Growth Rank of 89 (better than 89% compared with alternatives) for 2024, McKesson shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for McKesson. Sales Growth has a value of 76, which means that, currently, professionals expect the company to grow more than 76% of its competitors. The same is valid for Profit Growth with a value of 55 and for Capital Growth with 75. In addition, Stock Returns had an above-average rank value of 73, which means they have been higher than 73% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 89, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, McKesson exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. ...read more
Safety Strategy: McKesson Debt Financing Safety risky
| SAFETY METRICS | December 12, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 2 |
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| REFINANCING | ||||||||
| REFINANCING | 12 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 87 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 22 |
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ANALYSIS: With an Obermatt Safety Rank of 22 (better than 22% compared with alternatives), the company McKesson has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of McKesson is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for McKesson. Liquidity is at 87, meaning the company generates more profit to service its debt than 87% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 12, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 88% of its competitors. Leverage is also high at a rank of 2, which means that the company has an above-average debt-to-equity ratio. It has more debt than 98% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 22 (worse than 78% compared with alternatives), McKesson has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: McKesson Top Financial Performance
| COMBINED PERFORMANCE | December 12, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 93 |
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| GROWTH | ||||||||
| GROWTH | 89 |
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| SAFETY | ||||||||
| SAFETY | 87 |
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| COMBINED | ||||||||
| COMBINED | 96 |
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ANALYSIS: With an Obermatt Combined Rank of 96 (better than 96% compared with investment alternatives), McKesson (Health Care Distributors, USA) shares have much better financial characteristics than comparable stocks. Shares of McKesson are a good value (attractively priced) with a consolidated Value Rank of 93 (better than 93% of alternatives), show above-average growth (Growth Rank of 89) but are riskily financed (Safety Rank of 22), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 96, is a strong buy recommendation based on McKesson's financial characteristics. As the company McKesson's key financial metrics exhibit excellent performance in two areas, such as good value (Obermatt Value Rank of 93) and above-average growth (Obermatt Growth Rank of 89), it could be argued that the risk-taking in financing (Obermatt Safety Rank of only 22) indicates that the company is optimistic about the future and sees debt as an opportunity to boost returns. More debt means more shareholder returns if everything goes well. However, higher debt burdens are risky when interest rates rise or the business deteriorates in a crisis. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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