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Walgreens Boots Alliance (WBA) wins but lags the market: what you need to know

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OAlgreens Boots Alliance (WBA) closed the last trading day at $43.55, moving +0.9% from the previous trading session. This change lagged the S&P 500’s 2.39% gain on the day. Meanwhile, the Dow Jones gained 1.47% and the Nasdaq, a technology-heavy index, added 0.63%.

As of today, shares of the largest US drugstore chain have fallen 3.68% over the past month. At the same time, the Retail-Wholesale sector lost 16.38%, while the S&P 500 lost 10.51%.

Walgreens Boots Alliance will look to show strength ahead of its next earnings release. The company is expected to post EPS of $0.96, down 36.42% from the prior year quarter. Our most recent consensus estimate calls for quarterly revenue of $32.11 billion, down 5.64% from the prior year period.

Zacks consensus estimates for the full year from WBA call for earnings of $5.05 per share and revenue of $132.35 billion. These results would represent year-over-year variations of -4.9% and -3.66%, respectively.

Investors might also notice recent changes in analyst estimates for Walgreens Boots Alliance. Recent revisions tend to reflect the latest short-term trading trends. Thus, positive revisions to estimates reflect analysts’ optimism about the company’s business and profitability.

Research indicates that these revisions to estimates are directly correlated to near-term stock price dynamics. Investors can take advantage of this by using the Zacks ranking. This model accounts for these estimation changes and provides a simple and actionable scoring system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive track record of outperformance verified by external audits, with #1 stocks generating an average annual return of +25% since 1988 The Zacks Consensus EPS estimate rose 0.04% over the past month. Walgreens Boots Alliance currently sports a Zacks rank of #3 (Hold).

Valuation is also important, so investors should note that Walgreens Boots Alliance has a Forward P/E ratio of 8.54 at this time. Its industry sports an average Forward P/E of 8.54, so we can conclude that Walgreens Boots Alliance is trading at a non-noticeable gap comparatively.

Investors should also note that WBA has a PEG ratio of 2.35 at this time. The PEG ratio is similar to the widely used P/E ratio, but this measure also takes into account the company’s expected earnings growth rate. Retail – Pharmacies and Drug Stores had an average PEG ratio of 1.95 at yesterday’s closing price.

The Retail – Pharmacies and Drugstores industry is part of the Retail – Wholesale sector. This industry currently has a Zacks Industry Rank of 246, which places it in the bottom 3% of all 250+ industries.

The Zacks Industry Rankings are ranked from best to worst in terms of the average Zacks Ranking of individual companies in each of these industries. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

To follow WBA in upcoming trading sessions, be sure to use Zacks.com.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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