McKesson Second Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component McKesson (NYSE:MCK) will unveil its latest earnings on Thursday, October 25, 2012. McKesson delivers cost-reducing medicines, pharmaceutical supplies, information, and care management products and services.

McKesson Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average analyst estimate is for net income of $1.76 per share, a rise of 8% from the company’s actual earnings for the year-ago quarter. During the past three months, the average estimate has moved down from $1.77. Between one and three months ago, the average estimate moved down. It has risen from $1.75 during the last month. For the year, analysts are projecting profit of $7.26 per share, a rise of 13.8% from last year.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 6 cents, reporting net income of $1.55 per share against a mean estimate of profit of $1.49 per share.

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A Look Back: In the first quarter, profit rose 32.9% to $380 million ($1.58 a share) from $286 million ($1.13 a share) the year earlier, exceeding analyst expectations. Revenue rose 2.7% to $30.8 billion from $29.98 billion.

Stock Price Performance: Between August 23, 2012 and October 19, 2012, the stock price had risen $3.69 (4.3%), from $86.51 to $90.20. The stock price saw one of its best stretches over the last year between March 2, 2012 and March 16, 2012, when shares rose for 11 straight days, increasing 6.6% (+$5.39) over that span. It saw one of its worst periods between July 18, 2012 and July 30, 2012 when shares fell for nine straight days, dropping 6.2% (-$6.02) over that span.

Wall St. Revenue Expectations: Analysts predict a rise of 2.2% in revenue from the year-earlier quarter to $30.88 billion.

Key Stats:

This upcoming earnings announcement will be a chance to build on positive earnings momentum over the last three quarters. Net income rose 93.5% in the third quarter of the last fiscal year and 23.5% in the fourth quarter of the last fiscal year before increasing again in the first quarter.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 9.7% in the second quarter of the last fiscal year, 9.2% in the third quarter of the last fiscal year and 9.9% in the fourth quarter of the last fiscal year before increasing again in the first quarter.

Analyst Ratings: With eight analysts rating the stock a buy, none rating it a sell and five rating the stock a hold, there are indications of a bullish stance by analysts.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.1 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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