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McKesson (MCK) Beats Earnings Estimate in Q4, Revenues Miss
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McKesson Corporation (MCK - Free Report) reported fourth-quarter fiscal 2017 (ended Mar 31, 2017) earnings of $3.39 per share, beating the Zacks Consensus Estimate of $3.04. Earnings also came above the year-ago figure of $2.44.
Revenues improved 4% year over year to $48.7 billion but failed to meet the Zacks Consensus Estimate of $49.7 billion.
Stock Performance
In the last three months, the company’s stock has gained 1.16%, comparing unfavorably with the Zacks classified Medical/Dental Supplies sub industry’s gain of 3.13%. However, a long-term expected earnings growth rate of 6.28% instills confidence in investors.
Quarter in Detail
McKesson operates through two segments – Distribution Solutions and Technology Solutions. All growth rates given below are on a year-over-year basis.
At Distribution Solutions, revenues increased 5% to $48.2 billion. North America pharmaceutical distribution and services reported sales of $40.6 billion, up 5%, reflecting market growth and acquisitions. Revenues were hit by branded to generic conversions. Revenues from International pharmaceutical distribution and services were up 12% to $6.1 billion. Medical-Surgical distribution and services generated sales of $1.6 billion, up 9%.
However, revenues from the Technology Solutions business fell from $734 million in the year-ago quarter to $512 million. Quarterly revenues were affected by the decline in hospital software business.
McKesson Corporation Price, Consensus and EPS Surprise
As of Mar 31, 2017, McKesson had $2.8 million in cash and cash equivalents against $24.2 million as of Dec 31, 2016. During full-fiscal 2017 (ended Mar 31, 2017) the company generated cash amounting to $4.7 billion from operations. Also in fiscal 2017, McKesson paid $4.2 billion for acquisitions, repurchased $2.3 billion of its common stock, repaid approximately $1.6 billion in long-term debt, and paid $253 million in dividends.
Fiscal 2018 Outlook
McKesson expects earnings per share in the range of $11.75 to $12.45 for fiscal 2018. Distribution Solutions business revenue growth is expected to increase by mid-single digits year over year. The upside is expected to be driven by market growth and acquisitions. Revenues from Technology Solutions are expected to be down on a year-over-year basis.
Zacks Rank & Key Picks
McKesson currently carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the broader medical sector include Luminex Corporation , Hologic, Inc. (HOLX - Free Report) and Inogen Inc (INGN - Free Report) . Notably, Inogen and Luminex sport a Zacks Rank #1 (Strong Buy), while Hologic carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen promises a long-term adjusted earnings growth of almost 17.5%. The stock returned 84.1% in the last one year.
Luminex has an expected long-term adjusted earnings growth of almost 16.3% and the company’s stock added roughly 17.6% in the last three months.
Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 28.8%.
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McKesson (MCK) Beats Earnings Estimate in Q4, Revenues Miss
McKesson Corporation (MCK - Free Report) reported fourth-quarter fiscal 2017 (ended Mar 31, 2017) earnings of $3.39 per share, beating the Zacks Consensus Estimate of $3.04. Earnings also came above the year-ago figure of $2.44.
Revenues improved 4% year over year to $48.7 billion but failed to meet the Zacks Consensus Estimate of $49.7 billion.
Stock Performance
In the last three months, the company’s stock has gained 1.16%, comparing unfavorably with the Zacks classified Medical/Dental Supplies sub industry’s gain of 3.13%. However, a long-term expected earnings growth rate of 6.28% instills confidence in investors.
Quarter in Detail
McKesson operates through two segments – Distribution Solutions and Technology Solutions. All growth rates given below are on a year-over-year basis.
At Distribution Solutions, revenues increased 5% to $48.2 billion. North America pharmaceutical distribution and services reported sales of $40.6 billion, up 5%, reflecting market growth and acquisitions. Revenues were hit by branded to generic conversions. Revenues from International pharmaceutical distribution and services were up 12% to $6.1 billion. Medical-Surgical distribution and services generated sales of $1.6 billion, up 9%.
However, revenues from the Technology Solutions business fell from $734 million in the year-ago quarter to $512 million. Quarterly revenues were affected by the decline in hospital software business.
McKesson Corporation Price, Consensus and EPS Surprise
McKesson Corporation Price, Consensus and EPS Surprise | McKesson Corporation Quote
Financial Condition
As of Mar 31, 2017, McKesson had $2.8 million in cash and cash equivalents against $24.2 million as of Dec 31, 2016. During full-fiscal 2017 (ended Mar 31, 2017) the company generated cash amounting to $4.7 billion from operations. Also in fiscal 2017, McKesson paid $4.2 billion for acquisitions, repurchased $2.3 billion of its common stock, repaid approximately $1.6 billion in long-term debt, and paid $253 million in dividends.
Fiscal 2018 Outlook
McKesson expects earnings per share in the range of $11.75 to $12.45 for fiscal 2018. Distribution Solutions business revenue growth is expected to increase by mid-single digits year over year. The upside is expected to be driven by market growth and acquisitions. Revenues from Technology Solutions are expected to be down on a year-over-year basis.
Zacks Rank & Key Picks
McKesson currently carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the broader medical sector include Luminex Corporation , Hologic, Inc. (HOLX - Free Report) and Inogen Inc (INGN - Free Report) . Notably, Inogen and Luminex sport a Zacks Rank #1 (Strong Buy), while Hologic carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen promises a long-term adjusted earnings growth of almost 17.5%. The stock returned 84.1% in the last one year.
Luminex has an expected long-term adjusted earnings growth of almost 16.3% and the company’s stock added roughly 17.6% in the last three months.
Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 28.8%.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy).
You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>