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  • veqasfletch2001 veqasfletch2001 Jul 4, 2012 8:27 PM Flag

    Attractive PE

    A friend of mine recommended WAG as a good investment.

    His logic is very simple. WAG has low PE, good balance sheet, high potential for growth and a good dividend.

    I did some DD and I see WAG has a good balance sheet even after the deal with Boots.

    Yes, WAG ended ESRX relationship but if things go south, WAG probably can go back to ESRX with a deal like CVS. So RAD and CVS are just lucky for time being but that can end at any time. After all, CVS has $26B of goodwill which smoked all my hopes for CVS.

    WAG FY 2012 will end in next two months so I only consider FY 2013 and FY 2014.

    FY 2013 income is $2.93 or PE of 10.1 at current price. FY 2014 income is $3.23 or PE of 9.16.

    Now, Boots investment will also add about $.25/shr in 2013 that I don't consider right now.

    Another positive point is when WAG starts to sell some of Boots beauty products. These products have very high margin (60% of Boots profit comes from beauty products).

    Some WAG stores will sell Boots beauty products which: a)attract more customers for WAG b)WAG makes good profit out of them. Women spend billions for beauty products and some stuff are sold over $200 a piece (kill me but make me beautiful).

    You may say Europe is slowing down but medecine is not something to ignore and beauty products expenses as imortant as phone/cable/internet...expenses.

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    • Hey, Vegas how much are in the the hole for??

      Wag is a good Investment???

      The stock price and earnings over the last Quarter are on a downward trend..
      Let me repeat that, The Stock Price and
      Earnings are on a Downward Trend.

      Walgreens problems are being based on the Uncertinty of Europes economic Mess and the pattern of Problems Walgreens has shown with PBM's and Payor's(medicaid, govt.) in the USA, who are seeking solutions to lower costs.

      ESRX is is just the outcome from this pattern.

      You also Failed to mention the leverage
      Walgreens will be taking to engage in this M&A with 'Alliance Boots.
      Or Walgreens experience in a single payor market.

      Does your friend plan to find new revenue from his horses colic??


      Walgreens Investment risk has now to be modeled with Sushi bars, Nail salons,

      • 1 Reply to robbsbeach
      • <<The stock price and earnings over the last Quarter are on a downward trend..
        Let me repeat that, The Stock Price and
        Earnings are on a Downward >>

        Let me correct you. The ESRX impact has been taken, done and finished.
        You can't cry over the spilled milk every day.
        Time for Wag to sell plenty of No 7 lipsticks and Soltan Sun creams.
        WAG-Boots is the largest pharmacy in the world and probably the largest drug drug wholesaler. Drug makers will have a special discount prices for the largest drug seller.