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

Zacks Equity Research

CVS Health (CVS) closed at $74.51 in the latest trading session, marking a +0.17% move from the prior day. This change outpaced the S&P 500's 0.02% loss on the day. Elsewhere, the Dow lost 0.13%, while the tech-heavy Nasdaq added 0.08%.

Heading into today, shares of the drugstore chain and pharmacy benefits manager had lost 2.87% over the past month, lagging the Retail-Wholesale sector's gain of 4.05% and the S&P 500's gain of 3.81% in that time.

Investors will be hoping for strength from CVS as it approaches its next earnings release, which is expected to be February 12, 2020. In that report, analysts expect CVS to post earnings of $1.68 per share. This would mark a year-over-year decline of 21.5%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $64.20 billion, up 17.96% from the year-ago period.

CVS's full-year Zacks Consensus Estimates are calling for earnings of $7.03 per share and revenue of $253.71 billion. These results would represent year-over-year changes of -0.71% and +30.71%, respectively.

Investors should also note any recent changes to analyst estimates for CVS. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.04% higher within the past month. CVS is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note CVS's current valuation metrics, including its Forward P/E ratio of 10.58. Its industry sports an average Forward P/E of 10.58, so we one might conclude that CVS is trading at a no noticeable deviation comparatively.

It is also worth noting that CVS currently has a PEG ratio of 1.6. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Pharmacies and Drug Stores industry currently 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 industry currently has a Zacks Industry Rank of 102, which puts it in the top 40% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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