The 10-second takeaway
For the quarter ended March 31 (Q4), McKesson missed estimates on revenues and whiffed on earnings per share.
Compared to the prior-year quarter, revenue contracted. Non-GAAP earnings per share shrank significantly. GAAP earnings per share dropped significantly.
Gross margins grew, operating margins were steady, net margins contracted.
McKesson logged revenue of $30.62 billion. The 13 analysts polled by S&P Capital IQ expected a top line of $32.01 billion on the same basis. GAAP reported sales were the same as the prior-year quarter's.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $1.45. The 16 earnings estimates compiled by S&P Capital IQ averaged $2.30 per share. Non-GAAP EPS of $1.45 for Q4 were 31% lower than the prior-year quarter's $2.09 per share. GAAP EPS of $1.10 for Q4 were 47% lower than the prior-year quarter's $2.08 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 6.5%, 70 basis points better than the prior-year quarter. Operating margin was 2.1%, much about the same as the prior-year quarter. Net margin was 0.8%, 80 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $32.62 billion. On the bottom line, the average EPS estimate is $1.66.
Next year's average estimate for revenue is $131.25 billion. The average EPS estimate is $8.01.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 617 members out of 644 rating the stock outperform, and 27 members rating it underperform. Among 221 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 213 give McKesson a green thumbs-up, and eight give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on McKesson is outperform, with an average price target of $117.23.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool recommends McKesson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.