Is McKesson (MCK) a Great Value Stock Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 company value investors might notice is McKesson (MCK). MCK is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 10.69, which compares to its industry's average of 19.22. Over the past year, MCK's Forward P/E has been as high as 10.73 and as low as 7.94, with a median of 9.32.
We also note that MCK holds a PEG ratio of 1.51. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MCK's industry currently sports an average PEG of 1.99. Over the past 52 weeks, MCK's PEG has been as high as 1.52 and as low as 1.13, with a median of 1.33.
Finally, investors should note that MCK has a P/CF ratio of 19.77. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. MCK's P/CF compares to its industry's average P/CF of 37.65. Over the past year, MCK's P/CF has been as high as 19.77 and as low as 7.02, with a median of 8.90.
These are only a few of the key metrics included in McKesson's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MCK looks like an impressive value stock at the moment.
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