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

Zacks Equity Research

CVS Health (CVS) closed at $73.86 in the latest trading session, marking a +0.39% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.35%. Meanwhile, the Dow gained 0.24%, and the Nasdaq, a tech-heavy index, added 0.56%.

Prior to today's trading, shares of the drugstore chain and pharmacy benefits manager had lost 1.22% over the past month. This has lagged the Retail-Wholesale sector's gain of 4.87% and the S&P 500's gain of 4.69% in that time.

Wall Street will be looking for positivity from CVS as it approaches its next earnings report date. This is expected to be February 12, 2020. The company is expected to report EPS of $1.68, down 21.5% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $64.20 billion, up 17.96% from the year-ago period.

Any recent changes to analyst estimates for CVS should also be noted by investors. 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. 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. Within the past 30 days, our consensus EPS projection has moved 0.12% lower. CVS currently has a Zacks Rank of #3 (Hold).

Digging into valuation, CVS currently has a Forward P/E ratio of 10.3. For comparison, its industry has an average Forward P/E of 10.3, which means CVS is trading at a no noticeable deviation to the group.

Also, we should mention that CVS has a PEG ratio of 1.56. 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. The Retail - Pharmacies and Drug Stores was holding an average PEG ratio of 1.47 at yesterday's closing price.

The Retail - Pharmacies and Drug Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 34, putting it in the top 14% 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.

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

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