Head to Head Survey: Pharmerica Corporation (PMC) and McKesson Corporation (MCK)

Pharmerica Corporation (NYSE: PMC) and McKesson Corporation (NYSE:MCK) are both medical companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, profitabiliy, earnings, dividends, analyst recommendations and institutional ownership.

Profitability

This table compares Pharmerica Corporation and McKesson Corporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pharmerica Corporation	0.98%	11.03%	4.84%
McKesson Corporation	2.55%	29.99%	4.88%

Institutional & Insider Ownership

92.7% of Pharmerica Corporation shares are held by institutional investors. Comparatively, 89.0% of McKesson Corporation shares are held by institutional investors. 5.2% of Pharmerica Corporation shares are held by company insiders. Comparatively, 1.2% of McKesson Corporation shares are held by company 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.

Valuation & Earnings

This table compares Pharmerica Corporation and McKesson Corporation’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Pharmerica Corporation	$2.13 billion	0.38	$130.20 million	$0.67	38.51
McKesson Corporation	$198.53 billion	0.18	$4.35 billion	$23.34	7.14

McKesson Corporation has higher revenue and earnings than Pharmerica Corporation. McKesson Corporation is trading at a lower price-to-earnings ratio than Pharmerica Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Pharmerica Corporation and McKesson Corporation, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pharmerica Corporation	0	0	0	0	N/A
McKesson Corporation	1	9	6	0	2.31

McKesson Corporation has a consensus target price of $169.50, indicating a potential upside of 1.66%. Given McKesson Corporation’s higher possible upside, analysts plainly believe McKesson Corporation is more favorable than Pharmerica Corporation.

Dividends

McKesson Corporation pays an annual dividend of $1.12 per share and has a dividend yield of 0.7%. Pharmerica Corporation does not pay a dividend. McKesson Corporation pays out 4.8% of its earnings in the form of a dividend. Pharmerica Corporation has raised its dividend for 4 consecutive years.

Volatility & Risk

Pharmerica Corporation has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, McKesson Corporation has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500.

Summary

McKesson Corporation beats Pharmerica Corporation on 10 of the 16 factors compared between the two stocks.

Pharmerica Corporation Company Profile

PharMerica Corporation is an institutional pharmacy services company. The Company services healthcare facilities, provides pharmacy management services to hospitals and specialty infusion services to patients outside a hospital setting, and offers the national oncology pharmacy in the United States. Its segments include institutional pharmacy, which provides pharmacy products and services to residents and patients in skilled nursing facilities, nursing centers, assisted living facilities, hospitals and other long-term alternative care settings; specialty infusion services, which provides specialty infusion services focused on providing pharmaceutical products and clinical services to patients in client facilities, hospice and outside of hospital or nursing home settings, and specialty oncology pharmacy, which provides dispensing of oncology drugs, care management and other related services to patients, oncology practices and hospitals.

McKesson Corporation Company Profile

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.