), a leading healthcare services provider, is scheduled to report
second quarter fiscal 2014 results (ended Sep 30, 2013) on Oct
Earnings beat the Zacks Consensus Estimate by 19.0% last
quarter. We expect the trend to continue in the second quarter
albeit not by that magnitude.
Why a Likely Positive Surprise?
Our proven model shows that McKesson is likely to beat
earnings because it has the right combination of two key
Positive Zacks ESP
(Expected Surprise Prediction), which represents the difference
between the Most Accurate estimate and the Zacks Consensus
Estimate, is 0.99%. This is a meaningful and a leading indicator
of a likely positive earnings surprise for the shares.
Zacks Rank #2 (Buy)
: Note that stocks with a Zacks Rank #1, 2 and 3 have a
significantly higher chance of beating earnings estimates. We
caution against stocks with Zacks Ranks #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revision momentum.
The combination of McKesson's Zacks Rank #2 and an ESP of
+0.99% make us confident of an earnings beat on Oct 24.
Factors at Play
Contributions from recent acquisitions should help combat the
impact of the slowdown in generic launches. The company expects
revenues in its Distribution Solutions segment to rebound in
fiscal 2014 due to the addition of PSS World Medical and demand
from existing customers.
We remind investors that McKesson acquired PSS World Medical
in Feb 2013 for $1.9 billion. The acquisition has significantly
bolstered McKesson's Medical Surgical Distribution business
thereafter. Growth in the Technology Solutions segment is also
expected to accelerate from fiscal 2013 levels primarily due to
the impact of acquisitions.
Concurrent with its first quarter fiscal 2014 results,
McKesson upped its results and expects adjusted earnings in the
range of $8.05 - $8.35 per share, up from the earlier estimate of
$7.90 - $8.20 per share.
We are impressed by the company's efforts to realign its
portfolio and focus on core profitable businesses.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows that they have the right combination of elements to
post an earnings beat this quarter:
) has Earnings ESP of +2.35% and holds a Zacks Rank #2 (Buy).
Cardinal Health will be reporting its third quarter earnings on
Impax Laboratories Inc.
) has Earnings ESP of 16.7% and holds a Zacks Rank #3 (Hold). The
company will report its third quarter earnings on Nov 4.
) has Earnings ESP of +1.40% and holds a Zacks Rank #3 (Hold).
Biogen will be reporting its third quarter earnings on Oct 28.
BIOGEN IDEC INC (BIIB): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
IMPAX LABORATRS (IPXL): Free Stock Analysis
MCKESSON CORP (MCK): Free Stock Analysis
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