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11% Growth All Year

Stock (Symbol) Stock Price

Express Scripts (ESRX)

$85

Data is as of Expected to Report Sector

March 2, 2015

Apr 27 – May 1

Healthcare

Sharek’s Take
David SharekExpress Scripts is expected to have 11% profit growth each and every quarter in 2015. I’m a little disappointed in the slower-growth rate. I’ve owned this stock since 2001 when I first purchased it for clients at $7. ESRX used to be a perennial 20% grower, then 17%, and 15%. Profit growth was 13% last year, and now this year it looks like 11%. The company is a juggernaut in a solid industry, with high certainty and consistency. Although sales don’t grow fast, management bought back $800 million in company stock last qtr, $4.6 billion in 2014 (company market cap is $60 billion). At 16x earnings the stock is at my 2015 Fair Value. Still, it’s a great conservative stock to buy-and-hold with limited stress.    
One-Year Chart
ESRX_2015_Q1ESRX just swallowed up Medco, and has seen the benefits of integration. So looking ahead the company should experience more natural growth (which is now 11%). The Est. LTG of 13% is low, and the P/E of 16 is what I think the stock is worth.
Earnings Table
ESRX_2015_Q1_EPSSales growth was just 2% last qtr, but ESRX doesnt grow sales much because its big and it makes more profit (albeit less sales) by moving patients from brand name drugs to generics. Profit growth was 24% but that’s in the past.
 
ESRX beat by a penny but this wasn’t news. The co usually comes in around expectations.
 
Annual Profit Estimates
remain consistent.
 
Quarterly profit growth is expected to be just 11% in each of the next four quarters, down from a 15% avg last qtr.
Fair Value
ESRX_2015_Q1_PHWith the recent surge in the stock price, upside for 2015 is negligible, with 14% upside through 2016. ESRX could also acquire other PBMs and that might increase estimates. 
Ten-Year Chart
ESRX_2015_Q1_10yrI continue to hold this stock even through the lower growth rate because it has always been a dependable grower. This chart has looked this good from the stock’s inception.
Power Ranking Bottom Line
Growth Portfolio

22 of 23

Express Scripts will likely have its slowest growth in company history this year, albeit dependable growth. I’ll continue to hold the stock but its a smaller position at this point because of the lack of upside to Fair Value.
 
ESRX ranks 22nd of 23 stocks in the Growth Portfolio Power Rankings. It is not exciting enough for the Aggressive Growth Portfolio.
Aggressive Growth Portfolio

N/A

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