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

Zacks Equity Research

CVS Health (CVS) closed at $55.47 in the latest trading session, marking a -0.84% move from the prior day. This move lagged the S&P 500's daily gain of 0.28%. Meanwhile, the Dow gained 0.07%, and the Nasdaq, a tech-heavy index, added 0.71%.

Coming into today, shares of the drugstore chain and pharmacy benefits manager had gained 3.84% in the past month. In that same time, the Retail-Wholesale sector gained 2.94%, while the S&P 500 gained 1.93%.

Investors will be hoping for strength from CVS as it approaches its next earnings release, which is expected to be August 7, 2019. On that day, CVS is projected to report earnings of $1.70 per share, which would represent year-over-year growth of 0.59%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $62.61 billion, up 34.05% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.84 per share and revenue of $252.60 billion. These totals would mark changes of -3.39% and +30.14%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for CVS. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 0.13% lower within the past month. CVS is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, CVS is holding a Forward P/E ratio of 8.17. This valuation marks a discount compared to its industry's average Forward P/E of 9.1.

Also, we should mention that CVS has a PEG ratio of 1.13. 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 industry currently had an average PEG ratio of 1.28 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 205, which puts it in the bottom 20% 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.

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


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