CVS Stock Fundamentals at Conflict With Recent Chart Performance

CVS is taking the lead on a vaccination program

Dec 29, 2020 at 10:04 AM
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Pharmacy giant CVS Health Corporation (NYSE:CVS) is the biggest market-cap healthcare company in America. The company also owns Aetna, a health insurance provider, among many other brands in the healthcare sector.

On Dec. 21, CVS formally launched its Covid-19 vaccination program for highly impacted long-term care facilities. CVS Pharmacy teams began administering the first doses of the Pfizer (PFE) vaccine in facilities across 12 states. The company is expected to vaccinate up to four million residents and staff at over 40,000 facilities through this vaccination program, marking a significant step in the fight against the coronavirus.

The vaccine news has yet to impact the stock, with CVS limping into 2021 with a 7.2% year-to-date deficit. However, the shares are well off their March 23 annual bottom of $52.04, and the most recent pullback has been neatly contained by their 40-day moving average.

CVS Stock Chart

The company also has a forward dividend of $2.00 and a forward dividend yield of 2.94%. The company last paid a dividend of $0.50, and has paid dividends since 1997.

CVS has added a significant $88 billion to its already massive annual revenue since 2016. In just the past 12 months, CVS generated $266 billion in sales. The company has also grown its net income by about $2.6 billion over the past 5 years. The only negative mark on the company's income statement seems to be the $594 million in net losses the company reported back in 2018. As for its balance sheet, CVS has an outstanding debt of $87.27 billion.

Nonetheless, CVS stock has been trending downward since 2015 and now presents a great value to potential investors at a price-earnings ratio of 11.25. CVS stock has an even more attractive forward price-earnings ratio of 8.99. Overall, it is difficult to imagine CVS trading at such a low price for too much longer, especially with the launch of the vaccination program. The company will also likely see a solid increase in sales as the COVID-19 vaccine becomes available to the public and foot-traffic increases within CVS pharmacies. CVS investors should also see some decent gains from stock appreciation and dividends over the next few years.

Now does look like the time to pursue options, as the equity is currently seeing attractively priced premiums. CVS' Schaeffer's Volatility Index (SVI) of 28% sits higher than just 10% of readings in its annual range, suggesting short-term options are pricing in relatively low volatility expectations.


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