PetIQ (PETQ) & McKesson (MCK) Critical Comparison

PetIQ (NASDAQ: PETQ) and McKesson (NYSE:MCK) are both medical companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, risk, institutional ownership, earnings, profitability, valuation and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings and price targets for PetIQ and McKesson, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PetIQ 0 0 6 0 3.00
McKesson 1 6 8 0 2.47

PetIQ presently has a consensus price target of $28.20, suggesting a potential upside of 21.60%. McKesson has a consensus price target of $176.07, suggesting a potential upside of 18.70%. Given PetIQ’s stronger consensus rating and higher possible upside, analysts clearly believe PetIQ is more favorable than McKesson.

Institutional & Insider Ownership

37.0% of PetIQ shares are owned by institutional investors. Comparatively, 88.6% of McKesson shares are owned by institutional investors. 45.3% of PetIQ shares are owned by insiders. Comparatively, 1.2% of McKesson shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
PetIQ N/A N/A N/A
McKesson 2.34% 22.98% 4.22%

Valuation & Earnings

This table compares PetIQ and McKesson’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PetIQ $266.69 million 2.04 -$3.49 million $0.39 59.46
McKesson $198.53 billion 0.15 $5.07 billion $11.61 12.78

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

Dividends

McKesson pays an annual dividend of $1.36 per share and has a dividend yield of 0.9%. PetIQ does not pay a dividend. McKesson pays out 11.7% of its earnings in the form of a dividend. McKesson has increased its dividend for 5 consecutive years.

Summary

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

PetIQ Company Profile

PetIQ, Inc. develops, manufactures, and distributes pet medications, and health and wellness products for dogs and cats in the United States, Canada, and Europe. It offers pet prescription medications, including products for arthritis, thyroid, and diabetes and pain treatments, as well as heartworm preventatives, antibiotics, and other specialty medications; over-the-counter medications and supplies, such as flea and tick control products in various forms comprising spot on treatments, chewables, and collars; and health and wellness products consisting of specialty treats and other pet products, which include dental treats and nutritional supplements. The company provides its products primarily under the VetIQ, PetAction Plus, Advecta, PetLock Plus, and TruProfen brands. It sells its products through distributors as well as through retail stores, including approximately 40,000 retail pharmacy locations. PetIQ, Inc. was founded in 2010 and is headquartered in Eagle, Idaho.

McKesson Company Profile

McKesson Corporation provides pharmaceuticals and medical supplies in the United States and internationally. The company operates in two segments, McKesson Distribution Solutions and McKesson Technology Solutions. The McKesson Distribution Solutions segment distributes branded and generic pharmaceutical drugs, and other healthcare-related products; and provides practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices. This segment also provides specialty pharmaceutical solutions for pharmaceutical manufacturers; and medical-surgical supply distribution, logistics, and other services to healthcare providers. In addition, this segment operates retail pharmacy chains in Europe and Canada, as well as supports independent pharmacy networks in North America and Europe; and supplies integrated pharmacy management systems, automated dispensing systems, and related services to retail, outpatient, central fill, specialty, and mail order pharmacies. This segment serves retail national accounts, including national and regional chains, food/drug combinations, mail order pharmacies, and mass merchandisers; and institutional healthcare providers, such as hospitals, health systems, integrated delivery networks, and long-term care providers, as well as offers its services to pharmaceutical manufacturers. The McKesson Technology Solutions segment provides clinical, financial, and supply chain management solutions to healthcare organizations. McKesson Corporation was founded in 1833 and is headquartered in San Francisco, California.

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