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McKesson Corporation (MCK)

Company Dividend Discount ModelIndustry: Medical - DistributionSector: Healthcare

Valuation Snapshot

Stable Growth$694.39 - $1,683.04$1,031.83
Multi-Stage$499.69 - $546.56$522.70
Blended Fair Value$777.26
Current Price$732.78
Upside6.07%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2025202420232022202120202019201820172016
DPS3.25%4.27%2.752.502.322.212.202.342.322.092.011.94
YoY Growth--9.87%7.53%5.42%0.36%-6.12%0.68%11.45%3.56%3.69%7.49%
Dividend Yield--0.37%0.43%0.54%0.68%1.15%1.53%1.73%1.56%1.22%1.04%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)4,033.00
(-) Cash Dividends Paid (M)362.00
(=) Cash Retained (M)3,671.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)806.60504.13302.48
Cash Retained (M)3,671.003,671.003,671.00
(-) Cash Required (M)-806.60-504.13-302.48
(=) Excess Retained (M)2,864.403,166.883,368.53
(/) Shares Outstanding (M)125.60125.60125.60
(=) Excess Retained per Share22.8125.2126.82
LTM Dividend per Share2.882.882.88
(+) Excess Retained per Share22.8125.2126.82
(=) Adjusted Dividend25.6928.1029.70
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.21%6.21%7.21%
Fair Value$694.39$1,031.83$1,683.04
Upside / Downside-5.24%40.81%129.68%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)4,033.004,283.294,549.124,831.445,131.285,449.735,613.22
Payout Ratio8.98%25.18%41.39%57.59%73.80%90.00%92.50%
Projected Dividends (M)362.001,078.571,882.682,782.443,786.644,904.765,192.23

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.21%6.21%7.21%
Year 1 PV (M)979.31988.62997.93
Year 2 PV (M)1,552.121,581.771,611.69
Year 3 PV (M)2,082.812,142.772,203.87
Year 4 PV (M)2,573.672,672.922,775.02
Year 5 PV (M)3,026.853,173.463,325.71
PV of Terminal Value (M)52,546.0355,091.2557,734.15
Equity Value (M)62,760.7965,650.7968,648.37
Shares Outstanding (M)125.60125.60125.60
Fair Value$499.69$522.70$546.56
Upside / Downside-31.81%-28.67%-25.41%

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