Walgreens: High Yielder

Walgreens Boots Alliance (WBA) has traded mixed following FQ4 results as the company failed to dissuade the biggest fears in the market. A solid EPS beat was offset by a big revenue miss. The market automatically fears Amazon (AMZN) somehow already taking market share, but the opportunity exists on any dip.

Image Source: Walgreens Boots website
Comps Perspective The retail pharmacy missed analyst revenue estimates by $400 million. Considering quarterly sales of $33.4 billion, the amount has to be kept in perspective as relatively small. Walgreens Boots has traditionally missed revenue estimates while smashing EPS estimates just like this quarter with a $0.03 beat.
Considering the acquired Rite Aide stores, the market is looking far beyond the reported sales growth of 10.9% in FQ4. This addition might have contributed to some of the revenue miss, but the key to the investment story in any retailer is comp sales that are also a good signal on any impact from Amazon.
Walgreens Boots reported these key comp sales figures:
USA pharmacy sales +1.3% USA prescriptions +1.3% USA retail sales -1.9% Int'l comp pharmacy sales -3.4% Int'l retail sales -0.9% Wholesale pharmacy sales +4.7% The market doesn't like that a lot of negative numbers are on the list. In reality though, international sales don't even count for 10% of total sales so the only real issue is the USA retail sales.
The market wants to read any weakness into an Amazon issue.... Read more