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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of McKesson Corporation (NYSE:MCK), it is a company with strong financial health as well as an optimistic growth outlook. Below is a brief commentary on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on McKesson here.
Excellent balance sheet with reasonable growth potential
One reason why investors are attracted to MCK is its earnings growth potential in the near future of 32% underlying the notable 24% return on equity over the next few years leading up to 2022. MCK’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that MCK manages its cash and cost levels well, which is a key determinant of the company’s health. MCK appears to have made good use of debt, producing operating cash levels of 0.53x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.
Next Steps:
For McKesson, I’ve put together three key factors you should further examine:
- Historical Performance: What has MCK’s returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Valuation: What is MCK worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether MCK is currently mispriced by the market.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of MCK? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.