| Stock (Symbol) | Stock Price | |
Express Scripts (ESRX) |
$72 |
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| Data is as of | Expected to Report | Sector |
Aug 13, 2014 |
Oct 22 – Oct 27 |
Healthcare |
| Sharek’s Take | ||
 Express Scripts should have profit growth pick up during the 2nd half of 2014, but don’t get too excited. During the 1st half of the year ESRX had a slow business environment due to bad winter weather causing lower prescription volumes. In addition, new clients who were set to begin working with ESRX in 2014 pushed things to next year. Now profit growth is expected to be 20% or more the next two qtrs, but don’t get too excited because ESRX’s P/E of 15 probably won’t go past 17. Sure this is a solid company with certainty and consistency, but the growth opportunity is mid-to-high-teens profit growth, so ESRX likely won’t bolt higher. |
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| One-Year Chart | ||
 One year chart looks good even though profits have sucked this last year because UnitedHealth taok its business from ESRX and brought it in-house. Notice the Est LTG of only 13%, this used to be a 20% grower a decade ago. Don’t get too excited about the Estimates. P/E of 15 is good, this is a good stock. |
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| Earnings Table | ||
 ESRX increases profits by (1) buying back stock and (2) switching customers from low-margin brand name drugs to high margin generic drugs. So sales growth is usually flat. Last qtr ESRX has -5% revenue growth and 10% profit growth.The company beat by a penny last qtr and usually is around the analysts’ number. Annual Profit Estimates stayed consistent with last qtr. 2015 and 2016 profit estimates declined for the 2nd straight qtr. Quarterly profit growth is expected to accelerate then come back down to the mid-teens in 2015. |
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| Fair Value | ||
 For years I’ve thought ESRX is worth 17 times earnings. There’s a decent 16% upside to ESRX’s 2014 Fair Value and 29% upside to 2015’s. |
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| Ten-Year Chart | ||
 Express Scripts always paints a pretty ten-year chart. Note this stock usually goes down then hits new highs again shortly. The All Time high is currently $80, and that looks achievable. Do note ESRX isn’t a 20% grower anymore, those days are gone. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
19 of 25 |
Express Scripts should continue to rise through the end of the year, but don’t get fooled by the sudden burst in profit growth, as upside is good but limited. ESRX ranks behind the fast-growers and timely stocks in the Growth Portfolio, where it sits at 19th in the 25 stock Power Rankings. I like faster growing Healthcare and Internet stocks in the Aggressive Growth Portfolio right now. |
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Aggressive Growth Portfolio
N/A |
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