Value
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.5 |
| P/S | 10.0 |
| EV/EBITDA | 3.4 |
| Fwd P/E | 7.9 |
| PEG | 5.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 15.2x
- ▸PEG: 1.50
MCK · Why this verdict
Why McKesson (MCK) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
McKesson has delivered four consecutive earnings beats and offers roughly 8.7% upside to its analyst consensus target with a favorable risk/reward of nearly 2-to-1, but business quality scores below the minimum acceptable threshold with no identifiable competitive moat, the stock is trading below its 200-day moving average with falling on-balance volume, and a put/call ratio of 2.06 signals heavy downside hedging — a combination that warrants caution despite the attractive price geometry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Business quality scores at 3.5 — below the 4.0 minimum floor — with no identifiable competitive moat and thin operating margins; at this quality level, the business lacks the structural defenses to protect earnings if the operating environment softens. Warnings | Business quality score recovers above 5.0 within 12 months, supported by demonstrably improved margins or Piotroski metrics. | →Stable |
| CounterDespite the low quality score, the company has beaten earnings estimates in all four recent quarters, suggesting the business is more resilient in practice than the structural quality metrics imply. | ||
Four consecutive earnings beats — averaging roughly 3% above consensus, including an 8.9% beat in the third quarter — demonstrate consistent execution and a pattern of delivering at or above expectations across varying conditions. Catalyst breakdown | Beat streak extends to 6 consecutive quarters over the next 12 months, with average positive surprise remaining above 2%. | →Stable |
| CounterTwo of the four beats came in below 1.1% above consensus, meaning a modest cost surprise or guidance trim could break the streak without any structural deterioration in the business. | ||
A put/call ratio of 2.06 indicates that options participants hold more than twice as many put contracts as calls, reflecting heavy hedging activity or outright bearish positioning that often accompanies or precedes sustained price weakness. Risk breakdown | Put/call ratio falls below 1.0 for 2 consecutive months, signaling that the hedging overhang has been absorbed. | →Stable |
| CounterElevated put/call ratios on large-cap distribution businesses often reflect institutional holders hedging concentrated long positions rather than outright bearish conviction; the premium may dissipate without any price decline. | ||
The stock is trading below its 200-day moving average with net negative on-balance volume, though the moving average itself is still rising at roughly 1.3% per month — making this a pullback within a longer uptrend rather than a confirmed breakdown. Momentum breakdown | Price reclaims and holds above the 200-day moving average for 3 consecutive weeks, with on-balance volume turning positive. | →Stable |
| CounterMomentum scores are just below the 4.5 floor, and an improving MACD alongside an RSI of 62 suggests the pullback may already be nearing exhaustion; a small additional price move could restore the technical picture quickly. | ||
Business quality scores at 3.5 — below the 4.0 minimum floor — with no identifiable competitive moat and thin operating margins; at this quality level, the business lacks the structural defenses to protect earnings if the operating environment softens.
→StableWarnings
- Expectation
- Business quality score recovers above 5.0 within 12 months, supported by demonstrably improved margins or Piotroski metrics.
CounterDespite the low quality score, the company has beaten earnings estimates in all four recent quarters, suggesting the business is more resilient in practice than the structural quality metrics imply.
Four consecutive earnings beats — averaging roughly 3% above consensus, including an 8.9% beat in the third quarter — demonstrate consistent execution and a pattern of delivering at or above expectations across varying conditions.
→StableCatalyst breakdown
- Expectation
- Beat streak extends to 6 consecutive quarters over the next 12 months, with average positive surprise remaining above 2%.
CounterTwo of the four beats came in below 1.1% above consensus, meaning a modest cost surprise or guidance trim could break the streak without any structural deterioration in the business.
A put/call ratio of 2.06 indicates that options participants hold more than twice as many put contracts as calls, reflecting heavy hedging activity or outright bearish positioning that often accompanies or precedes sustained price weakness.
→StableRisk breakdown
- Expectation
- Put/call ratio falls below 1.0 for 2 consecutive months, signaling that the hedging overhang has been absorbed.
CounterElevated put/call ratios on large-cap distribution businesses often reflect institutional holders hedging concentrated long positions rather than outright bearish conviction; the premium may dissipate without any price decline.
The stock is trading below its 200-day moving average with net negative on-balance volume, though the moving average itself is still rising at roughly 1.3% per month — making this a pullback within a longer uptrend rather than a confirmed breakdown.
→StableMomentum breakdown
- Expectation
- Price reclaims and holds above the 200-day moving average for 3 consecutive weeks, with on-balance volume turning positive.
CounterMomentum scores are just below the 4.5 floor, and an improving MACD alongside an RSI of 62 suggests the pullback may already be nearing exhaustion; a small additional price move could restore the technical picture quickly.
Per-dimension breakdown
Quality
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROA | 3.3 |
| Gross margin | 0.0 |
| Op margin | 0.9 |
| Net margin | 0.6 |
| Current ratio | 3.4 |
| FCF quality | 7.9 |
| Moat | 4.9 |
| Piotroski F | 6.7 |
- ▸No competitive moat
Growth
6.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.0 |
| EPS growth | 9.4 |
Momentum
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 5.2 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+1.4%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.6 |
| Price target | 7.8 |
| erm sentiment | 5.4 |
- ▸Analyst upside: 21%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Insider selling (low materiality) — $10,317,467 (0.011% of mkt cap)
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.8 |
| quality rank | 5.0 |
| growth rank | 4.0 |
Technical
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.1 |
| support resistance | 2.9 |
| 52w position | 5.6 |
Risk (lower is worse)
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 7.1 |
| volatility | 6.3 |
| put call | 10.0 |
| implied vol | 7.1 |
| max pain risk | 3.0 |
| beta | 10.0 |
- ▸Above max pain $590
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.0 |
| dividend safety | 5.2 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 43.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:5.9>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:41d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:1.3<1.5@spot
Warning (1)
- 8K_FLAG:1.02
Reward-to-Risk
1.34
Upside
+8.7%
Downside
6.5%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 58
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Sentiment at 7.5 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:1.3<1.5@spot.
The strongest dimensions are Sentiment at 7.5, Risk (lower is worse) at 7.3, and Growth at 6.7; the weakest are Quality at 3.5, Technical at 3.9, and Peer rank at 4.9. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 1.34 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Business quality scores at 3.5 — below the 4.0 minimum floor — with no identifiable competitive moat and thin operating margins; at this quality level, the business lacks the structural defenses to protect earnings if the operating environment softens.
Trip ifBusiness quality score rises above 5.0 on the next annual update, driven by demonstrably improved margins or Piotroski metrics.
- P2Four consecutive earnings beats — averaging roughly 3% above consensus, including an 8.9% beat in the third quarter — demonstrate consistent execution and a pattern of delivering at or above expectations across varying conditions.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P3A put/call ratio of 2.06 indicates that options participants hold more than twice as many put contracts as calls, reflecting heavy hedging activity or outright bearish positioning that often accompanies or precedes sustained price weakness.
Trip ifPut/call ratio falls below 1.0 for 2 consecutive months.
- P4The stock is trading below its 200-day moving average with net negative on-balance volume, though the moving average itself is still rising at roughly 1.3% per month — making this a pullback within a longer uptrend rather than a confirmed breakdown.
Trip ifPrice rises above the 200-day moving average and on-balance volume rises above its prior 3-week average, both sustained for 3 consecutive weeks.