McKesson Corporation : An appropriate purchase level
The USD 86.18 support area, currently tested, might facilitate a technical rebound. The company’s fundamentals could validate this scenario.
From a fundamental viewpoint, the company seems undervalued relatively to its peers with a EV/Sales of 0.17. In the recent months, the earnings estimates for the next year are regularly revised upward by analysts. With an EPS estimated at 6.96 USD for this year and 7.64 USD for the next year, McKesson Corporation is currently paid 12.54 and 11.41 times the results.
Currently the stock is oversold and, in the mid-term, it is trading in a bearish trend. In the short term, this trend is reversed upon contact with the USD 86.20 area. McKesson Corporation should be able to confirm its increase in the next trading sessions. This support is a trading opportunity in order to anticipate a technical rebound towards USD 88.40 and by extension towards USD 96.60.
Considering technical and fundamental elements, it seems to be an appropriate timing to take immediately a long position in McKesson Corporation in order to benefit from the USD 86.20 support area. The target price will be fixed at the USD 96.60 resistance. A stop loss order will be placed under the mid-term support currently tested. Only a crossing of USD 88.40 would validate a bullish trend in order to aim a higher target price.
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Valuation |
2014e |
2015e |
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PER (Price / EPS)
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16,0x |
14,1x |
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Capitalization / Revenue
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0,20x |
0,19x |
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EV / Revenue
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0,21x |
0,20x |
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EV / EBITDA
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8,36x |
7,43x |
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Yield (DPS / Price)
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0,68% |
0,70% |
| Profitability |
2014e |
2015e |
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Operating Margin (EBIT / Sales)
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2,14% |
2,26% |
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operating laverage (Delta EBIT / Delta Sales)
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1,99x |
2,58x |
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Net Margin (Net Profit / Revenue)
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1,27% |
1,36% |
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ROA (Net Profit / Asset)
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5,58% |
8,00% |
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ROE (Net Profit / Equities)
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21,4% |
29,2% |
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Rate of Dividend
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10,9% |
9,94% |
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