Walgreens Boots Alliance (NASDAQ: WBA) and McKesson Corporation (NYSE:MCK) are both large-cap retail/wholesale companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, institutional ownership, earnings, profitability and risk.
This is a breakdown of current ratings and price targets for Walgreens Boots Alliance and McKesson Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Walgreens Boots Alliance||0||7||13||0||2.65|
Walgreens Boots Alliance presently has a consensus price target of $87.17, suggesting a potential upside of 22.79%. McKesson Corporation has a consensus price target of $173.21, suggesting a potential upside of 25.87%. Given McKesson Corporation’s higher possible upside, analysts clearly believe McKesson Corporation is more favorable than Walgreens Boots Alliance.
Walgreens Boots Alliance pays an annual dividend of $1.60 per share and has a dividend yield of 2.3%. McKesson Corporation pays an annual dividend of $1.36 per share and has a dividend yield of 1.0%. Walgreens Boots Alliance pays out 42.3% of its earnings in the form of a dividend. McKesson Corporation pays out 6.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. McKesson Corporation has raised its dividend for 4 consecutive years.
Institutional and Insider Ownership
63.8% of Walgreens Boots Alliance shares are held by institutional investors. Comparatively, 86.0% of McKesson Corporation shares are held by institutional investors. 13.5% of Walgreens Boots Alliance shares are held by insiders. Comparatively, 1.2% of McKesson Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
This table compares Walgreens Boots Alliance and McKesson Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Walgreens Boots Alliance||3.45%||18.36%||7.73%|
Earnings & Valuation
This table compares Walgreens Boots Alliance and McKesson Corporation’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Walgreens Boots Alliance||$118.21 billion||0.61||$4.08 billion||$3.78||18.78|
|McKesson Corporation||$198.53 billion||0.14||$5.07 billion||$21.09||6.52|
McKesson Corporation has higher revenue and earnings than Walgreens Boots Alliance. McKesson Corporation is trading at a lower price-to-earnings ratio than Walgreens Boots Alliance, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Walgreens Boots Alliance has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, McKesson Corporation has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500.
McKesson Corporation beats Walgreens Boots Alliance on 9 of the 17 factors compared between the two stocks.
About Walgreens Boots Alliance
Walgreens Boots Alliance, Inc. (Walgreens Boots Alliance) is a holding company. The Company is a global pharmacy-led, health and wellbeing enterprise. Walgreens Boots Alliance operates through three divisions, including Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. The Company’s products are marketed under a number of brands, which include No7, the Botanics range, Almus (generic medicines), Boots Pharmaceuticals and Soap & Glory (bathing and beauty brand). In addition, the Company has investments in Guangzhou Pharmaceuticals Corporation and Nanjing Pharmaceutical Company Limited. The Company operates in around 25 countries, which include the wholesale and distribution network with over 340 distribution centers and more than 180,000 pharmacies, health centers and hospitals in 19 countries.
About McKesson Corporation
McKesson Corporation (McKesson) is engaged in delivering pharmaceuticals, medical supplies and healthcare information technology. The Company operates through two segments: McKesson Distribution Solutions and Technology Solutions. The McKesson Distribution Solutions segment distributes drugs and equipment, and health and beauty care products across North America and internationally. The Distribution Solutions segment provides pharmaceutical solutions for biotech and pharmaceutical manufacturers, and practice management, technology, clinical support and business solutions to oncology and other specialty practices operating in the community setting. The Technology Solutions segment delivers clinical, patient care, financial, supply chain and strategic management software solutions, as well as connectivity, outsourcing and other services. Its McKesson Health Solutions portfolio includes ClarityQx, which is a payment technology.
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