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CVS Health (CVS) Gains As Market Dips: What You Should Know

Zacks Equity Research

CVS Health (CVS) closed at $61.31 in the latest trading session, marking a +1.59% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.05%. Elsewhere, the Dow gained 0.17%, while the tech-heavy Nasdaq lost 0.01%.

Heading into today, shares of the drugstore chain and pharmacy benefits manager had gained 12.51% over the past month, lagging the Retail-Wholesale sector's gain of 23.31% and the S&P 500's gain of 21.82% in that time.

CVS will be looking to display strength as it nears its next earnings release, which is expected to be May 6, 2020. The company is expected to report EPS of $1.62, unchanged from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $63.07 billion, up 2.31% from the prior-year quarter.

CVS's full-year Zacks Consensus Estimates are calling for earnings of $7.10 per share and revenue of $258.87 billion. These results would represent year-over-year changes of +0.28% and +0.82%, respectively.

It is also important to note the 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.57% lower within the past month. CVS is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, CVS is holding a Forward P/E ratio of 8.5. For comparison, its industry has an average Forward P/E of 8.5, which means CVS is trading at a no noticeable deviation to the group.

Meanwhile, CVS's PEG ratio is currently 1.35. 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. The Retail - Pharmacies and Drug Stores industry currently had an average PEG ratio of 1.27 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 202, putting it in the bottom 21% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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Zacks Investment Research