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Walgreens Boots Alliance (WBA) Gains But Lags Market: What You Should Know

Zacks Equity Research

Walgreens Boots Alliance (WBA) closed at $60.67 in the latest trading session, marking a +0.12% move from the prior day. The stock lagged the S&P 500's daily gain of 0.75%. Elsewhere, the Dow gained 0.69%, while the tech-heavy Nasdaq added 1.32%.

Heading into today, shares of the largest U.S. drugstore chain had gained 11.29% over the past month, outpacing the Retail-Wholesale sector's gain of 0.59% and the S&P 500's gain of 3.42% in that time.

Wall Street will be looking for positivity from WBA as it approaches its next earnings report date. The company is expected to report EPS of $1.39, down 4.79% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $34.59 billion, up 2.36% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.93 per share and revenue of $139.86 billion, which would represent changes of -1% and +2.19%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for WBA. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 0.1% higher within the past month. WBA is currently a Zacks Rank #4 (Sell).

In terms of valuation, WBA is currently trading at a Forward P/E ratio of 10.22. This represents a discount compared to its industry's average Forward P/E of 10.67.

Investors should also note that WBA has a PEG ratio of 1.51 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Pharmacies and Drug Stores industry currently had an average PEG ratio of 1.51 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 172, which puts it in the bottom 33% 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.

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


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