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

Zacks Equity Research

CVS Health (CVS) closed the most recent trading day at $65.70, moving -0.7% from the previous trading session. This change lagged the S&P 500's daily gain of 0.69%. At the same time, the Dow added 0.22%, and the tech-heavy Nasdaq gained 0.91%.

Heading into today, shares of the drugstore chain and pharmacy benefits manager had gained 3.98% over the past month, outpacing the Retail-Wholesale sector's loss of 1.18% and the S&P 500's loss of 0.61% in that time.

CVS will be looking to display strength as it nears its next earnings release, which is expected to be November 6, 2019. On that day, CVS is projected to report earnings of $1.77 per share, which would represent year-over-year growth of 2.31%. Our most recent consensus estimate is calling for quarterly revenue of $63 billion, up 33.29% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.97 per share and revenue of $252.49 billion. These totals would mark changes of -1.55% and +30.08%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for CVS. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

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 0.02% higher. CVS is holding a Zacks Rank of #2 (Buy) right now.

Valuation is also important, so investors should note that CVS has a Forward P/E ratio of 9.49 right now. Its industry sports an average Forward P/E of 9.49, so we one might conclude that CVS is trading at a no noticeable deviation comparatively.

We can also see that CVS currently has a PEG ratio of 1.44. 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 1.41 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 68, which puts it in the top 27% 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.

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


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