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CVS Health (CVS) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3 mins read

CVS Health (CVS) closed the most recent trading day at $58.95, moving +1.94% from the previous trading session. This change outpaced the S&P 500's 1.8% gain on the day. Elsewhere, the Dow gained 1.68%, while the tech-heavy Nasdaq added 2.33%.

Heading into today, shares of the drugstore chain and pharmacy benefits manager had lost 4.33% over the past month, outpacing the Retail-Wholesale sector's loss of 6% and the S&P 500's loss of 6.31% in that time.

Investors will be hoping for strength from CVS as it approaches its next earnings release. 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%. Meanwhile, our latest consensus estimate is calling for revenue of $66.34 billion, up 2.37% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.23 per share and revenue of $266.74 billion, which would represent changes of +2.12% and +3.88%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for CVS. Recent revisions tend to reflect the latest 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. 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 0.1% lower. CVS is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that CVS has a Forward P/E ratio of 8 right now. Its industry sports an average Forward P/E of 8, so we one might conclude that CVS is trading at a no noticeable deviation comparatively.

Investors should also note that CVS has a PEG ratio of 1.43 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. The Retail - Pharmacies and Drug Stores industry currently had an average PEG ratio of 1.43 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 232, which puts it in the bottom 9% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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