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Should Value Investors Buy McKesson (MCK) Stock?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is McKesson (MCK - Free Report) . MCK is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.35, which compares to its industry's average of 16.96. MCK's Forward P/E has been as high as 15.66 and as low as 9.77, with a median of 13.62, all within the past year.

Investors will also notice that MCK has a PEG ratio of 1.43. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MCK's industry currently sports an average PEG of 1.68. MCK's PEG has been as high as 1.56 and as low as 0.96, with a median of 1.35, all within the past year.

Finally, we should also recognize that MCK has a P/CF ratio of 19.38. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. MCK's current P/CF looks attractive when compared to its industry's average P/CF of 21.45. Over the past year, MCK's P/CF has been as high as 24.50 and as low as -10.53, with a median of 20.69.

These are just a handful of the figures considered in McKesson's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MCK is an impressive value stock right now.


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