COR

We rate Cencora, Inc. (COR) as a Buy with a composite score of 69.8/100 at a current price of $364.86. The stock scores above average across the majority of our six quantitative factors and ranks #99 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in stability (88th percentile) and quality (84th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (44/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Cencora, Inc. holds a top-quartile position (#2 of 50) within the Wholesale Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 69.8/100 places it at rank #99 in our full 7,333-stock universe. With a $60.5B market capitalization, Cencora, Inc. operates at meaningful scale within the Wholesale Trade sector, providing competitive advantages in distribution, procurement, and customer reach.

The near-term outlook is constructive, with revenue growing at 16% and momentum in the 70th percentile confirming positive market sentiment and institutional accumulation. The combination of strong top-line growth and favorable price dynamics suggests the company is executing well on its growth strategy. Investment factor at the 44th percentile indicates reinvestment patterns that investors should monitor for sustainability.

The margin cascade tells an important story: gross margins of 4% (-18.9pp vs sector) narrow to operating margins of 1% (-2.2pp vs sector) and net margins of 0.8%, yielding a gross-to-net conversion rate of 21%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $364.86, Cencora, Inc. appears undervalued relative to its fundamentals. Our value factor score of 77/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 28.5x (a 49% premium to the sector median of 19.1x), EV/EBITDA of 23.2x (at a premium), P/B of 33.5x, P/S of 0.2x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Medium uncertainty rating to Cencora, Inc.. The stock presents a balanced risk profile: significant leverage (378% debt-to-equity) and low beta of -0.01 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (378% debt-to-equity); low beta of -0.01 — while defensive, this may indicate limited upside participation in bull markets; the combination of leverage (378% D/E) and thin margins (0.8% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 88th percentile and quality factor at the 84th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (88th percentile) suggests predictable business dynamics; large-cap scale ($60.5B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Cencora, Inc.'s capital allocation as Poor. Key concerns include elevated leverage (378% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — Cencora, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, Cencora, Inc. receives a Buy rating with a composite score of 69.8/100 (rank #99 of 7,333). Our quantitative framework assigns a Narrow Moat (44/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 73/100.

Our analysis supports a constructive view on Cencora, Inc.. The combination of identifiable competitive advantages, medium uncertainty, and poor capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.