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    MCK · NYQ · Healthcare

    McKesson Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 1074.82

    Market price

    USD 998.38

    Implied upside

    +7.7%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-03-31

    AdjustedReported capital expenditure averages just 0.21% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.2%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 1074.82+7.7%
    Exit multiple
    USD 1049.79+5.1%
    Market price
    USD 998.38

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn9bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 431.9bnUSD 461.4bnUSD 490.5bnUSD 518.8bnUSD 545.8bnUSD 571.3bnUSD 594.9bnUSD 616.3bnUSD 635.0bnUSD 650.9bn+4.7%
    EBITUSD 6.4bnUSD 6.9bnUSD 7.3bnUSD 7.7bnUSD 8.1bnUSD 8.5bnUSD 8.8bnUSD 9.2bnUSD 9.4bnUSD 9.7bn+4.7%
    NOPATUSD 5.2bnUSD 5.6bnUSD 5.9bnUSD 6.3bnUSD 6.6bnUSD 6.9bnUSD 7.2bnUSD 7.5bnUSD 7.7bnUSD 7.9bn+4.7%
    Add depreciation & amortisationUSD 845.5mUSD 903.3mUSD 960.3mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bn+4.7%
    Less capital expenditureUSD -4.3bnUSD -4.2bnUSD -4.0bnUSD -3.7bnUSD -3.3bnUSD -3.0bnUSD -2.5bnUSD -2.0bnUSD -1.4bnUSD -846.5m-16.6%
    Capex, % of revenue1.0%0.9%0.8%0.7%0.6%0.5%0.4%0.3%0.2%0.1%-
    Less increase in working capitalUSD 697.6mUSD 725.6mUSD 713.8mUSD 693.4mUSD 664.1mUSD 626.0mUSD 579.1mUSD 523.7mUSD 460.3mUSD 389.6m+6.3%
    Free cashflow to firmUSD 2.4bnUSD 3.0bnUSD 3.6bnUSD 4.3bnUSD 5.0bnUSD 5.7bnUSD 6.4bnUSD 7.2bnUSD 7.9bnUSD 8.7bn+15.1%
    Discount factor0.96720.90490.84660.79200.74100.69320.64850.60670.56760.5310-
    Present valueUSD 2.4bnUSD 2.8bnUSD 3.1bnUSD 3.4bnUSD 3.7bnUSD 4.0bnUSD 4.2bnUSD 4.4bnUSD 4.5bnUSD 4.6bn-
    Present Value Of The ForecastUSD 36.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.517Reported 0.279, pulled toward 1.0 (Blume)
    Cost of equity7.08%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 26.1x interest cover. Book interest / average debt was lower, at 3.1%.
    Market capitalisationUSD 116.4bn93.1% of capital
    Total debtUSD 8.6bn6.9% of capital, book value as a proxy
    Tax rate18.7%Effective, capped at statutory
    WACC6.89%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 1074.82

    73% of EV

    Forecast FCFF, final year
    USD 8.7bn
    Capex at depreciation, working capital in reinvestment
    USD 8.5bn
    Less reinvestment at g/ROIC (4.2% of NOPAT)
    USD -354.5m
    Capitalised
    USD 8.2bn
    ROIC (reported)
    60.0%
    Terminal value, undiscounted
    USD 190.4bn
    Terminal value, discounted
    USD 101.1bn
    Enterprise value
    USD 138.0bn
    Less net debt
    USD 4.6bn
    Equity value
    USD 133.4bn

    Exit at 16.9x EBITDA

    Value per shareUSD 1049.79

    73% of EV

    Terminal value, undiscounted
    USD 184.5bn
    Terminal value, discounted
    USD 98.0bn
    Enterprise value
    USD 134.9bn
    Less net debt
    USD 4.6bn
    Equity value
    USD 130.3bn

    Spread between methods: 2%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.89%1569.161781.902084.322547.603345.40
    5.89%1177.181287.081429.821622.451896.32
    6.89%931.93995.941074.831174.361303.64
    7.89%764.45804.66852.56910.53982.00
    8.89%643.10669.70700.65737.06780.45

    Outlined: this model. Green text: above today's price of 998.38. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year13.4%4.9%4.2%
    EBIT margin1.7%1.5%1.4%
    Discount rate-6.9%7.2%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.