| Stock (Symbol) | Stock Price | |
Express Scripts (ESRX) |
$62 |
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| Data is as of | Expected to Report | Sector |
October 3, 2013 |
Oct 28 – Nov 1 |
Healthcare |
| Sharek’s Take | ||
 Express Scripts will be running on empty for the next couple of quarters. Earnings growth is only expected to be 6% and 7% during those quarters, and I don’t feel the stock will do much over that time.
Still, ESRX has a P/E of only 14 and this stock is a good selection for long-term investors who can be patient with their holdings. ESRX has a rare combination of certainty, consistency and growth opportunity (although the growth rate has slowed from 20% to 15% the past few years). |
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| One-Year Chart | ||
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| Earnings Table | ||
 Profits increased a sparkling 27% last quarter, but revenue fell 5% year-over-year. Here we see the true organic revenue growth of ESRX. The quarter earlier the company more than doubled revenue (with the Medco sales lumped in).
ESRX beat the street by two cents. This was a non-event. There is a big customer deal that’s hitting the books and is front loaded to estimates, after that profitability should increase. Still, I feel this will hold back the stock. |
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| Fair Value | ||
 I’m taking my Fair Value P/E from 18 to 16. The stock hasn’t had a median P/E of 18 since 2009. Upside isn’t much during the remainder of 2013, but is solid for 2014. |
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| Ten-Year Chart | ||
 This is one of the prettiest ten-year charts you will ever see. But ESRX will find it hard to grow at 20% a year anymore. I envision 15% per year into the future, perhaps 12% per year. Express Scripts typically has 5% or less revenue growth, and increases profits because customers move to generics with higher profit margins. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
20 of 25 |
Express Scripts will have slow growth for the next two quarters, and that means the stock will have little fuel to kick it to the next level. Upside is good for long-term investors though. This is a conservative stock that can grow 15% a year. Buy-and-hold.
ESRX ranks 20th in the 25 stock Growth Portfolio Power Rankings. It doesn’t have enough juice for the Aggressive Growth Portfolio. |
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Aggressive Growth Portfolio
N/A |
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ESRX has had a good year, but don’t be fooled by the rapid profit growth the past four quarters — this isn’t a 20% grower. The last year ESRX has been integrating Medco and that’s pushed profits up. Now the company has to grow organically, and as you can see from Estimates growth will slow.