), a leading healthcare services provider, is scheduled to report
fiscal third quarter 2014 results (ended Dec 31, 2013) on Jan 30,
Earnings beat the Zacks Consensus Estimate by 24 cents in the
second quarter. On an average, the company has delivered a
positive earnings surprise of 4.22% in the last four quarters.
Let's see how things are shaping up for the same.
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:
The Expected Surprise Prediction or ESP (
), which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is 0.54%. This is
meaningful and a leading indicator of a likely positive earnings
surprise for the shares.
Zacks Rank #3 (Hold):
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 an earnings announcement, especially when the
company is seeing negative estimate revision momentum.
The combination of McKesson's Zacks Rank #3 (Hold) and a
positive ESP of 0.54% make us confident of an earnings beat on
Factors at Play
McKesson is a major player in the pharmaceutical and medical
supplies distribution market. The company's Distribution
Solutions segment continues to perform well. We are impressed by
the company's efforts to realign its portfolio and focus on core
We note that McKesson upped its earnings expectations to
$8.40-$8.70 per share on the back of solid results in the first
half of fiscal 2014, compared to the earlier estimate of
$8.05-$8.35 per share. McKesson's performance in the fiscal first
half was driven by consistent growth in the pharmaceutical
business in the U.S. which is expected to grow significantly in
the next several years driven by increased generic
McKesson has been actively pursuing deals and acquisitions to
drive growth. The company acquired PSS World Medical in Feb 2013,
which is now a part of McKesson's Medical Surgical Distribution
business. The acquisition has bolstered McKesson's Medical
Surgical Distribution business. McKesson is on the lookout for
more such prudent deals, which will drive growth further.
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 an Earnings ESP of +2.27% and holds a Zacks Rank #3 (Hold).
Sanofi will be reporting its fourth quarter earnings on Feb
) has an Earnings ESP of +2.41% and holds a Zacks Rank #3. AbbVie
will be reporting its fourth quarter earnings on Jan 31.
) has an Earnings ESP of +0.33% and holds a Zacks Rank #1 (Strong
Buy). Actavis will be reporting its fourth quarter earnings on
ABBVIE INC (ABBV): Free Stock Analysis Report
ACTAVIS PLC (ACT): Free Stock Analysis Report
MCKESSON CORP (MCK): Free Stock Analysis
SANOFI-AVENTIS (SNY): Free Stock Analysis
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