Critical Contrast: McKesson (NYSE:MCK) vs. Henry Schein (NASDAQ:HSIC)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Henry Schein	3.02%	14.76%	5.56%
McKesson	1.04%	-248.14%	5.84%

Volatility & Risk

Henry Schein has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, McKesson has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500.

Valuation and Earnings

This table compares Henry Schein and McKesson”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Henry Schein	$12.67 billion	0.71	$390.00 million	$3.16	24.22
McKesson	$359.05 billion	0.28	$3.30 billion	$32.13	25.34

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Henry Schein and McKesson, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Henry Schein	1	7	6	0	2.36
McKesson	0	4	12	2	2.89

Henry Schein currently has a consensus price target of $76.92, suggesting a potential upside of 0.49%. McKesson has a consensus price target of $892.86, suggesting a potential upside of 9.67%. Given McKesson’s stronger consensus rating and higher probable upside, analysts plainly believe McKesson is more favorable than Henry Schein.

Insider and Institutional Ownership

96.6% of Henry Schein shares are owned by institutional investors. Comparatively, 85.1% of McKesson shares are owned by institutional investors. 1.1% of Henry Schein shares are owned by company insiders. Comparatively, 0.1% of McKesson shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

McKesson beats Henry Schein on 9 of the 15 factors compared between the two stocks.

About Henry Schein

Henry Schein, Inc. provides health care products and services to dental practitioners, laboratories, physician practices, and ambulatory surgery centers, government, institutional health care clinics, and other alternate care clinics worldwide. It operates through two segments, Health Care Distribution, and Technology and Value-Added Services. The Health Care Distribution segment offers dental products, including infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, dental implants, gypsum, acrylics, articulators, abrasives, dental chairs, delivery units and lights, X-ray supplies and equipment, personal protective equipment, and high-tech and digital restoration equipment, as well as equipment repair services. This segment also provides medical products, such as branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray products, equipment, and vitamins. The Technology and Value-Added Services segment offers software, technology, and other value-added services that include practice management software systems for dental and medical practitioners; and value-added practice solutions comprising practice consultancy, education, revenue cycle management and financial services, e-services, practice technology, and network and hardware services, as well as consulting, and continuing education services. Henry Schein, Inc. was founded in 1932 and is headquartered in Melville, New York.

About McKesson

McKesson Corporation provides healthcare services in the United States and internationally. It operates through four segments: U.S. Pharmaceutical, Prescription Technology Solutions (RxTS), Medical-Surgical Solutions, and International. The U.S. Pharmaceutical segment distributes branded, generic, specialty, biosimilar and over-the-counter pharmaceutical drugs, and other healthcare-related products. This segment also offers practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices; and consulting, outsourcing, technological, and other services, as well as sells financial, operational, and clinical solutions to pharmacies. The RxTS segment serves biopharma and life sciences partners, and patients to address medication challenges for patients by working across healthcare; connects patients, pharmacies, providers, pharmacy benefit managers, health plans, and biopharma companies to deliver innovative solutions to help people get the medicine needed to live healthier lives; and provides prescription price transparency, benefit insight, dispensing support, third-party logistics, and wholesale distribution support services. The Medical-Surgical Solutions segment offers medical-surgical supply distribution, logistics, and other services to healthcare providers, including physician offices, surgery centers, nursing homes, hospital reference labs, and home health care agencies. The International segment provides distribution and services to wholesale, institutional, and retail customers in Europe and Canada. McKesson Corporation was founded in 1833 and is headquartered in Irving, Texas.