Does Walgreens Boots Alliance Inc’s (NASDAQ:WBA) 23% Earnings Growth Make It An Outperformer?
Assessing Walgreens Boots Alliance Inc’s (NASDAQ:WBA) performance as a company requires looking at more than just a years’ earnings data. Below, I will run you through a simple sense check to build perspective on how Walgreens Boots Alliance is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its consumer retailing industry peers.
Check out our latest analysis for Walgreens Boots Alliance
Could WBA beat the long-term trend and outperform its industry?
WBA’s trailing twelve-month earnings (from 31 August 2018) of US$5.0b has jumped 23% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 12%, indicating the rate at which WBA is growing has accelerated. How has it been able to do this? Let’s see whether it is solely owing to industry tailwinds, or if Walgreens Boots Alliance has seen some company-specific growth.
In terms of returns from investment, Walgreens Boots Alliance has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 8.2% exceeds the US Consumer Retailing industry of 7.5%, indicating Walgreens Boots Alliance has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Walgreens Boots Alliance’s debt level, has increased over the past 3 years from 9.9% to 13%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Walgreens Boots Alliance has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Walgreens Boots Alliance to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for WBA’s future growth? Take a look at our free research report of analyst consensus for WBA’s outlook.
Financial Health: Are WBA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 August 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
