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CVS Health (CVS) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research
·3 mins read

In the latest trading session, CVS Health (CVS) closed at $58.51, marking a -1.03% move from the previous day. This change lagged the S&P 500's daily loss of 0.66%. At the same time, the Dow lost 0.58%, and the tech-heavy Nasdaq lost 0.8%.

Prior to today's trading, shares of the drugstore chain and pharmacy benefits manager had gained 3.72% over the past month. This has lagged the Retail-Wholesale sector's gain of 9.09% and the S&P 500's gain of 5.22% in that time.

CVS will be looking to display strength as it nears its next earnings release, which is expected to be November 6, 2020. On that day, CVS is projected to report earnings of $1.31 per share, which would represent a year-over-year decline of 28.8%. Our most recent consensus estimate is calling for quarterly revenue of $66.34 billion, up 2.37% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.23 per share and revenue of $266.74 billion. These totals would mark changes of +2.12% and +3.88%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for CVS. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.1% lower within the past month. CVS is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, CVS is currently trading at a Forward P/E ratio of 8.18. Its industry sports an average Forward P/E of 8.18, so we one might conclude that CVS is trading at a no noticeable deviation comparatively.

Meanwhile, CVS's PEG ratio is currently 1.46. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. CVS's industry had an average PEG ratio of 1.46 as of yesterday's close.

The Retail - Pharmacies and Drug Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 231, putting it in the bottom 9% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow CVS in the coming trading sessions, be sure to utilize Zacks.com.


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