AbbVie Inc. (ABBV) vs McKesson Corporation (MCK): Which Is the Better Buy in 2026?
As of 2026-08-03, ABBV is overvalued at $251, with a DCF intrinsic value of $178 and a margin of safety of -41%. MCK is undervalued at $856, with an intrinsic value of $140987785214 and a margin of safety of 100%. Of the two, MCK has the wider margin of safety.
Rewards
- ★AbbVie Inc. has maintained ROIC above 10% for 4 consecutive years, suggesting solid business economics.
- ★Gross margin of 72.8% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★AbbVie Inc. scores 82/100 on the Economic Moat Score (Wide Moat), with reinvestment efficiency as the strongest competitive dimension.
- ★McKesson Corporation has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★McKesson Corporation scores 89/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
- ★Each dollar of retained earnings has created $1.28 of earning power — management is creating shareholder value.
Risks
- ⚠Buybacks have been poorly timed — 3 out of 4 years involved repurchases at relatively expensive valuations.
- ⚠Free cash flow has declined at a 9.8% CAGR over the past 4 years — a concerning trend.
- ⚠Gross margin of 3.6% is low, suggesting a competitive or commodity-like market with limited pricing power.
- ⚠8 insider sales totaling $23.6M with no purchases in the past 3 months — insiders are reducing their exposure.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →Requires positive FCF to compute implied growth rate.
What growth rate is the market pricing in at $856?
The market implies -30.0% Owner Earnings growth, below historical trends — potential opportunity.
Standard FCF implies a more demanding -30.0%, reflecting heavy growth investment expected to generate future returns.
Economic Moat Score
Learn more →Wide moat with strength across all dimensions. Reinvestment Efficiency is the standout factor.
Wide moat with strength across all dimensions. ROIC Consistency is the standout factor.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is optimistic — be cautious and ensure you have a margin of safety"
"Market is pricing this stock without strong emotion in either direction"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: ABBV vs MCK
Is AbbVie Inc. or McKesson Corporation more undervalued in 2026?▼
Based on our discounted cash flow model, MCK trades at a 100.0% margin of safety (intrinsic value $140987785214 vs. price $856), compared to ABBV's -40.7% margin of safety (intrinsic $178 vs. $251).
Which stock has a wider economic moat, AbbVie Inc. or McKesson Corporation?▼
MCK scores 89/100 (Wide moat), while ABBV scores 82/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is AbbVie Inc. in financial distress?▼
ABBV's Altman Z-Score of 2.4 places it in the Grey zone, signaling elevated bankruptcy risk. MCK scores 5.4 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which stock has higher return on invested capital, AbbVie Inc. or McKesson Corporation?▼
MCK earns 80.1% ROIC versus ABBV's 27.6%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, AbbVie Inc.'s or McKesson Corporation's?▼
MCK's dividend earns a safety score of 94/100 (Very Safe), compared to ABBV's 39/100 (Unsafe). MCK has raised its dividend for 3 consecutive years.