Comparing McKesson (NYSE:MCK) & Pro-Dex (NASDAQ:PDEX)

Pro-Dex (NASDAQ:PDEX) and McKesson (NYSE:MCK) are both medical companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, earnings, analyst recommendations, profitability and risk.

Institutional and Insider Ownership

15.3% of Pro-Dex shares are owned by institutional investors. Comparatively, 85.1% of McKesson shares are owned by institutional investors. 47.5% of Pro-Dex shares are owned by insiders. Comparatively, 0.1% of McKesson shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings for Pro-Dex and McKesson, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pro-Dex	0	0	1	0	3.00
McKesson	0	3	10	1	2.86

Pro-Dex presently has a consensus target price of $56.00, suggesting a potential upside of 10.67%. McKesson has a consensus target price of $710.17, suggesting a potential downside of 0.49%. Given Pro-Dex’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Pro-Dex is more favorable than McKesson.

Profitability

This table compares Pro-Dex and McKesson’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pro-Dex	14.61%	29.08%	16.19%
McKesson	0.92%	-201.12%	5.83%

Volatility and Risk

Pro-Dex has a beta of 0.19, meaning that its stock price is 81% less volatile than the S&P 500. Comparatively, McKesson has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500.

Valuation and Earnings

This table compares Pro-Dex and McKesson”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pro-Dex	$53.84 million	3.06	$2.13 million	$2.80	18.07
McKesson	$359.05 billion	0.25	$3.30 billion	$25.83	27.63

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

Summary

McKesson beats Pro-Dex on 8 of the 15 factors compared between the two stocks.

About Pro-Dex

Pro-Dex, Inc. designs, develops, manufactures, and sells powered surgical instruments for medical device original equipment manufacturers worldwide. The company offers autoclavable, battery-powered and electric, and multi-function surgical drivers and shavers that are primarily used in the orthopedic, thoracic, and craniomaxillofacial markets. It also provides engineering, quality, and regulatory consulting services; and manufactures and sells rotary air motors to various industries. The company's products are used in hospitals, medical engineering labs, scientific research facilities, and high-tech manufacturing operations. Pro-Dex, Inc. was founded in 1978 and is headquartered in Irvine, California.

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.