The 10-second takeaway
For the quarter ended June 30 (Q1), McKesson met expectations on revenues and crushed expectations on earnings per share.
Compared to the prior-year quarter, revenue grew. Non-GAAP earnings per share grew significantly. GAAP earnings per share expanded significantly.
Margins grew across the board.
McKesson notched revenue of $32.21 billion. The 12 analysts polled by S&P Capital IQ expected sales of $32.50 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 $2.07. The 14 earnings estimates compiled by S&P Capital IQ averaged $1.70 per share. Non-GAAP EPS of $2.07 for Q1 were 34% higher than the prior-year quarter's $1.55 per share. GAAP EPS of $1.83 for Q1 were 16% higher than the prior-year quarter's $1.58 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 6.0%, 80 basis points better than the prior-year quarter. Operating margin was 2.1%, 40 basis points better than the prior-year quarter. Net margin was 1.3%, 10 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $32.52 billion. On the bottom line, the average EPS estimate is $2.04.
Next year's average estimate for revenue is $131.44 billion. The average EPS estimate is $8.13.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 625 members out of 650 rating the stock outperform, and 25 members rating it underperform. Among 238 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 231 give McKesson a green thumbs-up, and seven 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 $123.87.
Is McKesson the best health care stock for you? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average health care logistics company. Click here for instant access to this free report.
- Add McKesson to My Watchlist.
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.
More from The Motley Fool
McKesson Fights Back With Strong Earnings, Revenue Gains
Find out how the drug wholesaler kept doing well despite ongoing pressure.
3 Dividend Healthcare Stocks
If you're on the hunt for outstanding healthcare dividend stocks, Allergan, Bristol-Myers Squibb, and McKesson need to be on your radar.
3 Healthcare Stocks That Are Looking Cheap Right Now
Looking for value in the red-hot healthcare sector? These three cash cows might be a good place to start.