Financial Survey: McKesson (NYSE:MCK) vs. Align Technology (NASDAQ:ALGN)

Align Technology (NASDAQ:ALGN) and McKesson (NYSE:MCK) are both large-cap medical companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Align Technology and McKesson, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Align Technology	2	7	6	1	2.38
McKesson	0	4	12	1	2.82

Align Technology presently has a consensus target price of $175.45, suggesting a potential upside of 19.25%. McKesson has a consensus target price of $887.69, suggesting a potential upside of 0.99%. Given Align Technology’s higher probable upside, analysts clearly believe Align Technology is more favorable than McKesson.

Institutional & Insider Ownership

88.4% of Align Technology shares are held by institutional investors. Comparatively, 85.1% of McKesson shares are held by institutional investors. 0.7% of Align Technology shares are held by insiders. Comparatively, 0.1% of McKesson shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Align Technology	9.50%	14.06%	8.77%
McKesson	0.84%	-196.66%	5.66%

Valuation and Earnings

This table compares Align Technology and McKesson”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Align Technology	$3.98 billion	2.65	$421.36 million	$5.16	28.51
McKesson	$387.09 billion	0.28	$3.30 billion	$32.13	27.36

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

Volatility & Risk

Align Technology has a beta of 1.84, suggesting that its share price is 84% more volatile than the S&P 500. Comparatively, McKesson has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500.

Summary

Align Technology beats McKesson on 8 of the 14 factors compared between the two stocks.

About Align Technology

Align Technology, Inc. designs, manufactures, and markets Invisalign clear aligners, and iTero intraoral scanners and services for orthodontists and general practitioner dentists in the United States, Switzerland, and internationally. The company's Clear Aligner segment offers comprehensive products, including Invisalign comprehensive package that addresses the orthodontic needs of younger patients, such as mandibular advancement, compliance indicators, and compensation for tooth eruption; and Invisalign First Phase I and Invisalign First Comprehensive Phase 2 package for younger patients generally between the ages of six and ten years, which is a mixture of primary/baby and permanent teeth. The segment also provides Invisalign moderate, lite and express packages, and Invisalign go and Invisalign Go Plus; retention products, Invisalign training, and adjusting tools used by dental professionals during the course of treatment; and Invisalign Palatal Expander, a 3D printed orthodontic device; and 3D printing solutions. Its Imaging Systems and CAD/CAM Services segment offers iTero intraoral scanning system, a single hardware platform for restorative or orthodontic procedures; restorative software for general practitioner dentists, prosthodontists, periodontists, and oral surgeons; and orthodontists software for digital records storage, orthodontic diagnosis, and fabrication of printed models and retainers. This segment also provides Invisalign outcome simulator, a chair-side and cloud-based application for the iTero scanner; Invisalign progress assessment tool; Align Oral Health Suite, a digital interface designed to enhance dental consultations; and TimeLapse technology, which allows doctors or practitioners to compare a patient's historic 3D scans to the present-day scan, as well as subscription software, disposables, rentals, leases, pay per scan, and CAD/CAM software solutions. The company was incorporated in 1997 and is headquartered in Tempe, Arizona.

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.