Price to Operating Profit (P/OP)
since 2005
Calculation
McKesson Corp., P/OP, long-term trends, calculation
| P/OP | = | Share price1, 2, 3 | ÷ | Operating profit per share1 | Operating profit per share1 | = | Operating income (loss)1 (in millions) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| May 5, 2016 | 10.96 | = | 172.70 | ÷ | 15.75 | 15.75 | = | 3,545 | ÷ | 225,020,523 | |
| May 12, 2015 | 17.91 | = | 229.55 | ÷ | 12.82 | 12.82 | = | 2,968 | ÷ | 231,553,531 | |
| May 14, 2014 | 17.36 | = | 178.20 | ÷ | 10.27 | 10.27 | = | 2,367 | ÷ | 230,576,753 | |
| May 7, 2013 | 10.63 | = | 108.63 | ÷ | 10.22 | 10.22 | = | 2,315 | ÷ | 226,611,092 | |
| May 2, 2012 | 9.88 | = | 90.17 | ÷ | 9.13 | 9.13 | = | 2,149 | ÷ | 235,397,188 | |
| May 5, 2011 | 11.47 | = | 82.84 | ÷ | 7.22 | 7.22 | = | 1,821 | ÷ | 252,120,037 | |
| May 4, 2010 | 9.13 | = | 67.54 | ÷ | 7.40 | 7.40 | = | 2,008 | ÷ | 271,391,624 | |
| May 5, 2009 | 8.66 | = | 38.18 | ÷ | 4.41 | 4.41 | = | 1,196 | ÷ | 271,418,501 | |
| May 7, 2008 | 10.76 | = | 57.36 | ÷ | 5.33 | 5.33 | = | 1,478 | ÷ | 277,279,250 | |
| May 9, 2007 | 14.06 | = | 59.78 | ÷ | 4.25 | 4.25 | = | 1,264 | ÷ | 297,204,662 | |
| May 16, 2006 | 13.48 | = | 49.37 | ÷ | 3.66 | 3.66 | = | 1,114 | ÷ | 304,120,397 | |
| May 13, 2005 | — | = | 37.68 | ÷ | -0.64 | -0.64 | = | -191 | ÷ | 299,979,779 |
Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31), 10-K (reporting date: 2010-03-31), 10-K (reporting date: 2009-03-31), 10-K (reporting date: 2008-03-31), 10-K (reporting date: 2007-03-31), 10-K (reporting date: 2006-03-31), 10-K (reporting date: 2005-03-31).
1 US$
2 Data adjusted for splits and stock dividends.
3 Closing price as at the filing date of McKesson Corp. Annual Report.
A sustained increase in both share price and operating profit per share is observed between 2005 and 2016. The operating profit per share transitioned from a negative value in 2005 to 15.75 US$ by 2016, reflecting a significant expansion in operational earnings power over the analyzed period.
- Profitability Growth
- Operating profit per share demonstrated a consistent upward trajectory after 2005. The progression from -0.64 US$ to 15.75 US$ indicates a strong recovery and subsequent growth phase in operational performance.
- P/OP Ratio Stability and Fluctuations
- From 2006 to 2013, the Price to Operating Profit (P/OP) ratio remained relatively range-bound, fluctuating primarily between 8.66 and 14.06. This suggests that during this period, the market valuation of the company tracked closely with its operating profits.
- Valuation Spike (2014-2015)
- A significant expansion in the P/OP ratio occurred in 2014 and 2015, where the ratio climbed to 17.36 and 17.91, respectively. This peak correlates with the highest share prices in the series, reaching 229.55 US$ in 2015, indicating a period of premium valuation relative to operating profit.
- Multiple Compression (2016)
- In 2016, a sharp contraction in the P/OP ratio to 10.96 is observed. This occurred despite operating profit per share reaching its period high of 15.75 US$, as the share price corrected to 172.70 US$. This shift indicates a return to historical valuation norms following the 2014-2015 peak.
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Comparison to Competitors
McKesson Corp., P/OP, long-term trends, comparison to competitors
| McKesson Corp. | Abbott Laboratories | Intuitive Surgical Inc. | Medtronic PLC | UnitedHealth Group Inc. | |
|---|---|---|---|---|---|
| May 5, 2016 | 10.96 | 24.25 | 28.93 | 22.18 | 11.79 |
| May 12, 2015 | 17.91 | 19.80 | 27.25 | 28.81 | 9.59 |
| May 14, 2014 | 17.36 | 27.50 | 34.42 | 16.68 | 10.12 |
| May 7, 2013 | 10.63 | 22.79 | 17.96 | 11.80 | 7.22 |
| May 2, 2012 | 9.88 | 6.82 | 26.21 | — | 6.32 |
| May 5, 2011 | 11.47 | 15.35 | 27.83 | — | 6.55 |
| May 4, 2010 | 9.13 | 11.92 | 23.28 | — | 5.90 |
| May 5, 2009 | 8.66 | 13.54 | 33.47 | — | 5.95 |
| May 7, 2008 | 10.76 | 14.66 | 14.45 | — | 6.59 |
| May 9, 2007 | 14.06 | 18.76 | 55.84 | — | 7.62 |
| May 16, 2006 | 13.48 | 40.49 | 38.98 | — | 10.47 |
| May 13, 2005 | — | 15.48 | 50.21 | — | 14.87 |
Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31), 10-K (reporting date: 2010-03-31), 10-K (reporting date: 2009-03-31), 10-K (reporting date: 2008-03-31), 10-K (reporting date: 2007-03-31), 10-K (reporting date: 2006-03-31), 10-K (reporting date: 2005-03-31).