What happened

Shares of McKesson Corporation (MCK 0.90%), America's largest pharmaceutical distributor, have risen 8.8% as of 11:20 a.m. EDT on Friday. A fiscal 2017 earnings report released after yesterday's bell was awfully encouraging.

So what

During the year ended March 31, McKesson's GAAP earnings rose 137% over the previous-year period to $23.28 per share. Before getting too excited, though, it's important to realize that figure includes $14.10 per share related to the Change Healthcare joint venture.

Excited person in front of an upward-sloping chart.

Image source: Getty Images.

About $1.25 billion in cash proceeds that fluffed up earnings this year were due to a one-time event, but there were other nuggets of encouragement in the company's full-year report. Despite the relentless downward pressure U.S. end payers have applied to pharmaceutical prices recently, North American distribution and services revenue of $164.8 billion was 4% higher than in the previous year.

Now what

McKesson is expecting this year to be a tough one. In fiscal 2018, management expects GAAP earnings to reach between $7.10 and $8.80 per share, which is well below the amount reported this year after subtracting cash received in connection with the formation of Change Healthcare.

To overcome industry headwinds, McKesson has been making acquisitions left and right. Adjusting for non-cash charges mainly related to those acquisitions, though, raises the company's earnings expectations to between $11.75 and $12.45 for fiscal 2018. At recent prices, the stock is trading at just 13.1 times the low end of this year's adjusted earnings estimate. The road ahead might be a bumpy one, but at this price, the stock looks like a bargain.