What Does Walgreens Stock Have to Offer as Earnings Loom?

WBA has beat earnings expectations on all of its last four quarterly reports

facebook twitter linkedin

Walgreens Boots Alliance Inc (NASDAQ:WBA) is gearing up for its fiscal second-quarter earnings, due out before the open on Thursday, March 31. While WBA reported earnings of $1.68 per share last quarter, covering analysts anticipate that the company's EPS (earnings per share) will drop to $1.48 for the upcoming report. A look back at its last eight reports shows WBA settling higher after four of these session, and averaged a next-day move of 5.7%, regardless of direction.

WBA was last seen up 1.8% at $47.85, and yesterday the company announced it was partnering up with Laboratory Corp. of America (LH), otherwise known as LabCorp, to offer the latter's "Pixel by LabCorp COVID-19 at-home collection kit" free of charge. On the charts, the equity has staged a slow climb off its late-February rout, though it ran out of steam yesterday at the 30-day moving average, which is in the vicinity of the stock's year-over-year breakeven level. Year-to-date, WBA is down 8.5%. 

wba chart march 8

Analysts are still hesitant. Of the 10 in coverage, eight say "hold," and two say "sell" or worse. Meanwhile, the 12-month consensus price target of $53.55 is a relatively slim 11.7% premium to current levels. 

WBA offers a solid dividend yield of 4.06% with a forward dividend of $1.91. Walgreens stock also has an attractive valuation from a fundamental point of view, trading at a forward price-earnings ratio of 9.24 and a price-sales ratio of 0.30.

However, in terms of WBA's top- and bottom-line growth, the healthcare name has struggled to find consistency on an annual basis. Walgreens experienced a 5% drop in revenues for fiscal 2021 and a 91% decrease in net income between fiscal 2018 and fiscal 2020, after back-to-back years of bottom-line declines. Nonetheless, WBA’s revenues have held up strongly, and the healthcare company is estimated to see a 3.2% increase in revenues and a 2.2% increase in earnings for fiscal 2022.

Overall, Walgreens needs-based business model and WBA’s low valuation makes it and excellent option for dividend investors due to the high-dividend yield and a fairly decent possibility of long-term appreciation.


Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Schaeffer's Daily Bulletin Offer


Special Offers from Schaeffer's Trading Partners