McKesson Insiders Take Advantage Of High Prices
Investors worried about insider selling of McKesson Corporation (NYSE: MCK) can lay those fears to rest. While insider selling of the sort seen over the last year isn’t necessarily a good thing for market confidence it doesn’t have the appearance of panic selling or impending doom. Far from it, in fact. With shares up over 80% in the last 12 months and trading at a multi-year high, we’d be surprised not to see insiders taking advantage of their stock-based compensation packages. So, there have been 18 insider transactions over the past 12 months and all were sales. Those are offset by the company’s performance, the stock’s performance, guidance, and institutional buying. While the insiders are taking profits the institutions are scooping the stock up and have institutional ownership over 90%.
McKesson Corporation Beats And Raises Guidance
McKesson Corporation reported fiscal 2nd quarter results and gave the market what it wanted to hear. The company grew revenue and expanded its adjusted margin all while continuing the exit from European operations. The company reported $66.60 billion in net consolidated revenue which is good for a gain of 9.5% over last year and 15% versus two years ago.
The revenue was driven by strength in all segments and beat the consensus by 530 basis points as well. On a segment basis, Prescription Technology led the group with a gain of 40% and was followed by a 23% increase in Medical/Surgical and an 11% increase in U.S. Pharmacy. The International segment posted a net decline of 8.0% but that is due to divestitures.
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Moving down to the earnings, the companies GAAP earnings of $1.71 are down from last year and missed the consensus by $2.38 but there are mitigating factors that include charges related to the exit from Europe. On an adjusted basis, the company pulled in $6.15 in EPS or up 28% from last year and beat the consensus by $1.49.
The company is expecting revenue and earnings strength to continue into the end of the year and raised the guidance because of it. The company is expecting FY adjusted EPS in the range of $21.95 to $22.50 or up 28% from last year. This compares to the $20.32 consensus estimate and we see upside risk in the numbers. With COVID tailwinds still blowing and elective procedures on the rise, revenue and earnings could easily outpace the consensus estimates.
McKesson Corporation Maintains A Healthy Dividend
McKesson Corporation is not a high-yielding stock with a yield near 0.90% but it is incredibly safe, has a positive outlook for growth, and growth could accelerate into the double digits. The company is paying out only 9% of its earnings consensus, has a strong balance sheet, and has a 14-year history of distribution increases so no reason not to expect another increase at the end of the fiscal year.
The Technical Outlook: McKesson Pops On Q2 Results
Shares of McKesson Corporation popped nearly 3.5% in the wake of the Q2 results and guidance raise putting the stock at a new 6-year high. The move has price action breaking above resistance and confirmed by the indicators as well. Assuming the market is able to follow through on this move we see this stock continuing its move higher. The next target for resistance is near the 2015 all-time high and the consensus price target of $241. A break above that level would be incredibly bullish for price action.
McKesson Company Profile (NYSE: MCK)
McKesson Corp. engages in the provision of supply chain management solutions, retail pharmacy, community oncology and specialty care, and healthcare information technology. It operates through the following segments: U.S. Pharmaceutical; International; Medical-Surgical Solutions; and Prescription Technology Solutions (“RxTS“).
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Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| McKesson (MCK) | $539.94 | +0.8% | 0.46% | 24.46 | Moderate Buy | $533.50 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
