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Is McKesson (MCK) a Great Value Stock Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is McKesson (MCK - Free Report) . MCK is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.84, which compares to its industry's average of 16.04. Over the past year, MCK's Forward P/E has been as high as 10.18 and as low as 7.78, with a median of 9.12.

We also note that MCK holds a PEG ratio of 1.43. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MCK's industry currently sports an average PEG of 1.67. Within the past year, MCK's PEG has been as high as 1.48 and as low as 1.13, with a median of 1.35.

Finally, we should also recognize that MCK has a P/CF ratio of 9.21. 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 13.34. Within the past 12 months, MCK's P/CF has been as high as 9.32 and as low as 6.39, with a median of 7.94.

These figures are just a handful of the metrics value investors tend to look at, but they help show that McKesson is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MCK feels like a great value stock at the moment.


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