McKesson Corporation

Methodology

McKesson's pharmaceutical distribution model generates relatively stable earnings from prescription drug volumes and specialty pharma growth, though generic pricing dynamics and one-time settlements create some volatility. Long-term contracts with manufacturers and pharmacy chains provide revenue visibility. The calculation works well when normalizing for litigation charges and focusing on core distribution profitability.

Methodology

McKesson typically trades at low PEG ratios reflecting the mature, low-margin nature of pharmaceutical distribution despite steady demand growth from aging demographics. The metric works for comparing to distribution peers though investors should adjust for litigation impacts and specialty pharma contributions. Business stability often matters more than growth rates in justifying valuations.

Methodology

McKesson offers a modest dividend with management emphasizing aggressive buybacks as the primary capital return mechanism. Buyback activity significantly supplements the moderate dividend yield. For this cash-generative distributor, total capital returns through dividends and repurchases matter more than dividend yield alone in assessing shareholder value creation.