Introduction
McKesson Corporation (MCK) reported quarterly results last week and beat on both the top and bottom line while raising guidance and announcing a massive $2 billion share buyback program. The stock responded with a yawn and now sets around $180 per share. MCK presents a compelling investment opportunity in the healthcare space, particularly after the recent sell-off from $243 to $180 per share. This downward movement was flanked by great earnings reports, increased dividend and additional share buybacks. MCK continues to become cheaper and cheaper as each earnings report is announced and the company continues to purchase additional shares. McKesson looks to be undervalued given its growth rate, acquisitive mindset, attractive P/E, dividend and share buyback program. I previously wrote an article outlining my bull case for McKesson and since then the stock has only become cheaper. I feel McKesson is a buy below $200 per share.
McKesson's Blowout Quarterly Results
McKesson reported revenue of $58.8 billion which translates into a 10% increase from the prior fiscal year quarter. On top of this revenue growth, earnings per share increased 19%, cash, and cash equivalents reached $5.2 billion, the company initiated a $2 billion share buyback program and raised guidance from $12.36-$12.86 to $12.50-$13.00 per share. All of these attributes bode well for investors, and now McKesson has a trailing 12 month EPS of $8.26 and with a current price of $179 this translates into a P/E of 21.7. This is an attractive P/E given its shareholder-friendly capital return plan via dividends and share buybacks along with its growth. Continue reading "McKesson Delivers Another Steller Quarterly Report"
