Stock (Symbol) |
Walgreen’s (WBA) |
Stock Price |
$80 |
Sector |
| Food & Necessities |
Data is as of |
| January 31, 2016 |
Expected to Report |
| Apr 7 – Apr 11 |
Company Description |
 Walgreens Boots Alliance, Inc. (Walgreens Boots Alliance) is a holding company. The Company is a global pharmacy-led, health and wellbeing enterprise. Walgreens Boots Alliance operates through three divisions, including Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. The Company’s products are marketed under a number of brands, which include No7, the Botanics range, Almus (generic medicines), Boots Pharmaceuticals and Soap & Glory (bathing and beauty brand). In addition, the Company has investments in Guangzhou Pharmaceuticals Corporation and Nanjing Pharmaceutical Company Limited. The Company operates in around 25 countries, which include the wholesale and distribution network with over 340 distribution centers and more than 180,000 pharmacies, health centers and hospitals in 19 countries. Source: Thomson Financial |
Sharek’s Take |
 Walgreens Boots Alliance (WBA) is looking good. The company is in the midst of a period where profits are growing in the mid-teens, and that’s expected to continue. Profits on average for the last 4 qtrs/next 4 qtrs look to average 16.5% year-over-year. Plus, investors get a 2% dividend yield. So that could be 8% growth for 18 times earnings. The company is also trying to acquire Rite Aid, but the deal might not be approved by regulators. WBA is expected to pay cash for the drug store chain, so earnings per share (EPS) would conceivably benefit but this will take away from WBA’s stock buyback program, which was helping EPS. On December 31, 2014 Walgreen’s merged with Alliance Boots, which is made up Boots UK, the UK’s leading pharmacy-led health and beauty retailer, and Alliance Healthcare, the largest pharmaceutical wholesaler in the UK. The influx of new management has transformed Walgreen’s to a leaner, more efficient machine with better merchandising. Walgreen’s is a conservative stock which has increased its dividend 39 straight years and at one time grew profits 34 consecutive years. The stock sells for 18x earnings and since it’s growing in the mid-teens plus paying a good dividend I feel this is a solid value in a bearish market. |
One Year Chart |
 WBA seems to be hitting support at $80, and although the stock is down around 20% from its highs this chart doesn’t look bad compared to many others on the market. Last qtr profits grew 27% on a 49% increased in sales largely due to the inclusion of Alliance Boots. Same store sales increased an impressive 6%. Profit growth Estimates for the next 4 qtrs are 9%, 15%, 14% and 14% profit growth. The company has also beaten the street the past 4 qtrs, while Annual Profit Estimates have remained pretty steady. |
Fair Value |
 My Fair Value on this stock is $94 which is 21x earnings. The current rocky market conditions should be beneficial to drug store chains and companies that can grow with the high dollar. My hypothetical estimated total return is 20% this year, 35% by the end of 2017. |
Bottom Line |
 Walgreens has had a rocky decade, but in the decades prior to this one the stock was a leader. I feel the company has its groove back with new ideas coming from Boots Alliance and perhaps it can deliver solid mid-teens profit growth annually. WBA ranks 10th of 34 stocks in the Conservative Growth Portfolio Power Rankings and 27st of 38 stocks in the Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
27 of 38Aggressive Growth Portfolio N/AConservative Stock Portfolio 10 of 34 |
