McKesson Corp. (NYSE:MCK)

A consistent upward trajectory in Earnings before interest, tax, depreciation and amortization (EBITDA) is observed from March 31, 2011, through March 31, 2016. The EBITDA grew from 2,353 million US$ to 4,488 million US$, representing a total increase of approximately 90.7% over the five-year period. While growth was steady in the early years, a significant acceleration occurred between 2014 and 2016.

EBITDA Growth Patterns

The period between 2011 and 2013 was characterized by moderate growth, with a slight plateau observed in 2013 where EBITDA only increased by 29 million US$. However, a sharp escalation began in 2015, where EBITDA rose by 945 million US$ in a single year, followed by another increase of 440 million US$ in 2016.

Depreciation and Amortization Trends

The variance between EBITDA and Earnings before interest and tax (EBIT) indicates a rising trend in depreciation and amortization expenses. In 2011, the difference was 496 million US$, which expanded to 885 million US$ by 2016. This expansion suggests an increase in the company's asset base or higher non-cash charges resulting from capital investments and acquisitions.

Operational Efficiency and Earnings Flow

Earnings before tax (EBT) and EBIT mirrored the positive growth of EBITDA, though they experienced more pronounced fluctuations. The gap between EBIT and EBT remained relatively stable compared to the EBITDA-EBIT spread, suggesting that interest expenses and non-operating items did not scale as aggressively as operational growth.

Net Income Correlation

Net income attributable to McKesson Corporation showed a less linear progression than EBITDA. Between 2012 and 2014, net income experienced a slight contraction, falling from 1,403 million US$ to 1,263 million US$, despite EBITDA continuing to rise. A significant recovery and surge occurred in 2016, where net income increased by 52% to reach 2,258 million US$, aligning more closely with the overall growth in operational profitability.

The financial trajectory from 2011 to 2016 is characterized by steady operational growth contrasted with significant fluctuations in enterprise valuation.

Enterprise Value Trends

The enterprise value grew modestly between 2011 and 2013, followed by a sharp acceleration in 2014, where it increased from 27,034 million to 49,411 million. This upward movement peaked in 2015 at 57,740 million before experiencing a substantial contraction to 43,051 million by March 31, 2016.

Operational Performance (EBITDA)

EBITDA demonstrated consistent and linear growth throughout the analyzed period. Starting at 2,353 million in 2011, the figure increased annually, reaching 4,488 million by 2016. This represents a nearly two-fold increase in operational earnings over the six-year span, indicating a stable and positive trend in fundamental earnings power.

EV/EBITDA Ratio Volatility

The EV/EBITDA ratio remained relatively stable between 8.11 and 9.83 from 2011 to 2013. A significant valuation expansion occurred in 2014, with the ratio spiking to 15.92, and remaining elevated at 14.26 in 2015. By 2016, the ratio normalized to 9.59. The divergence between the valuation multiple and EBITDA growth during 2014 and 2015 suggests a period of temporary valuation inflation that reverted to historical norms by 2016, despite the continued increase in operational earnings.