It's been a rough year for drug distribution companies, such as McKesson
But, at some point, a sector reaches bargain-basement prices. Fool contributor W.D. Crotty indicated this in a recent piece.
Investors, in fact, were expecting only negatives from McKesson's earnings report last week. For the company's second quarter, revenues increased 19% to $19.9 billion compared with the same period a year ago. Earnings came in at $86 million, which was down from $157 million in last year's second quarter.
Unfortunately, McKesson lowered its full-year guidance to $2.00 to $2.20 per share compared with $2.20 to $2.35 per share.
However, the company got traction with a new deal with Department of Veterans Affairs. Moreover, there was growth from the acquisition of AdvancePCS.
The big fear for investors is that drug distribution is a dinosaur of a business. Won't manufacturers, such as Pfizer
Unfortunately, what this may mean, ultimately, is more pressure on already razor-thin margins for drug distributors.
Fool contributor Tom Taulli does not own any of the shares mentioned in this article.