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CVS Health (CVS) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 min read

In the latest trading session, CVS Health (CVS) closed at $69.54, marking a +0.32% move from the previous day. This move lagged the S&P 500's daily gain of 0.58%. Meanwhile, the Dow gained 0.49%, and the Nasdaq, a tech-heavy index, added 0.84%.

Prior to today's trading, shares of the drugstore chain and pharmacy benefits manager had gained 4.48% over the past month. This has outpaced the Retail-Wholesale sector's gain of 2.51% and the S&P 500's gain of 2.12% in that time.

Investors will be hoping for strength from CVS as it approaches its next earnings release. The company is expected to report EPS of $1.25, down 27.75% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $68.54 billion, up 2.47% from the year-ago period.

CVS's full-year Zacks Consensus Estimates are calling for earnings of $7.42 per share and revenue of $267.85 billion. These results would represent year-over-year changes of +4.8% and +4.31%, respectively.

It is also important to note the recent changes to analyst estimates for CVS. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.03% lower. CVS is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that CVS has a Forward P/E ratio of 9.34 right now. For comparison, its industry has an average Forward P/E of 9.34, which means CVS is trading at a no noticeable deviation to the group.

Investors should also note that CVS has a PEG ratio of 1.59 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CVS's industry had an average PEG ratio of 1.63 as of yesterday's close.

The Retail - Pharmacies and Drug Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 76, which puts it in the top 30% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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Zacks Investment Research