Stock (Symbol) |
Walgreen’s (WBA) |
Stock Price |
$80 |
Sector |
| Food & Necessities |
Data is as of |
| July 28, 2016 |
Expected to Report |
| Oct 26 – 31 |
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 |
 Analysts have been negative on Walgreens Boots Alliance (WBA). Profits rose a respectable 16% last qtr as same store sales increased 4% (overall sales rose just 2%). WBA is doing well with its Boots Alliance integration, and profiting from synergies. 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 trying to buy Rite Aid, but the government might not approve the merger. Either way is fine, as the company could use that money to buy back stock instead, thus increasing EPS. This safe stock has increased its dividend since 1976 and at one time grew profits 34 consecutive years. It has its fiscal year end August 30th, thus I’m looking ahead to 2017 when calculating my P/E, which is a very reasonable 16. Profit growth looks to be in the double-digits going forward and with the stock’s 2% yield investors are getting a long-term value. |
One Year Chart |
 Sales grew just 2% last qtr, which is not great. Front of the store sales are weak, and that’s what analysts have focused on, as those items often carry good profit margins. Looking ahead, profit growth is expected to be 13%, 14%, 8% and 9% the next 4 qtrs and I guess the company will come in around that. WBA sometimes lowers estimates a bit then beats the street by a bit, which is a wash. Est LTG of 13% plus a 2% yield isn’t bad — and the P/E is a reasonable 16. |
Fair Value |
 My Fair Value on this stock is 19x earnings, which gives WBA solid upside. In fact, there’s not many stocks I follow that are undervalued as much as this one. |
Bottom Line |
 Walgreens Boots Alliance has solid management which buys back stock, makes acquisitions, and pays a dividend. Analysts are down on the stock right now but I feel that could turn around in the near future. There’s not many stocks which are undervalued in this stock market, but WBA is one of them. This stock is a good selection for conservative investors. WBA ranks 17th of 37 stocks in the Conservative Growth Portfolio Power Rankings and 32nd of 37 stocks in the Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
32 of 37Aggressive Growth Portfolio N/AConservative Stock Portfolio 17 of 37 |
