Pharmaceutical retailer Walgreens Boots Alliance, Inc. (WBA) warned of facing lower sales persisting into next year due to inflation affecting consumers’ spending. The end of the COVID emergency led to a sharp drop in the sale of vaccines and tests, according to the company’s executives.
WBA increased the target of an ongoing cost-cutting program to counter those pressures. The company lowered its full-year adjusted EPS guidance from $4.45-$4.65 to $4.00-$4.05.
Given the challenging industry backdrop, WBA is trying to streamline its operations and focus on its consumer-facing healthcare business. In May, the company announced that it would slash its corporate staff by about 10%.
Let’s look at the trends of WBA’s key financial metrics to understand why waiting for a better entry point in the stock could be wise.
Analyzing the Variations and Trends in Walgreens Boots Alliance Inc.'s Financial Performance From 2020-2023
The trend and fluctuations of WBA's trailing-12-month net income show significant variances over the period from August 2020 to May 2023.
- At the start of this series, in August 2020, WBA's net income was $456 million.
- By November 2020, there was a considerable dip to -$697 million.
- The downtrend persisted until February 2021, with the net income at -$617 million.
- A sharp rebound was observed by May 2021, with the net income rising dramatically to $2.29 billion despite preceding negative values.
- Further upward movement was seen by the end of August 2021, with the net income increasing to $2.54 billion.
- This upward trajectory continued through November 2021 to February 2022, peaking at $6.43 billion and $6.29 billion, respectively.
- However, a continuous descent was observed from May 2022 onward, with the net income falling dramatically to -$2.96 billion by November 2022.
- The negative trend worsened into 2023, with consecutive drops to -$3.14 billion in February 2023 and -$3.32 billion in May 2023.
In conclusion, WBA’s net income fluctuated sharply throughout the series but with an overall negative growth rate. The value fell from an initial $456 million to -$3.32 billion, demonstrating dramatic volatility, particularly toward the latter period of the data series.
The trailing-12-month revenue of WBA has demonstrated moderate fluctuations over the observed period. The revenue started at $139.54 billion in August 2020, and despite some ups and downs, it closed at a lower figure of $136.11 billion as of May 2023. Gleaning from the more recent data:
- In November 2022, the revenue stood at $132.18 billion.
- The subsequent quarter, February 2023, saw a slight increase to $133.29 billion.
- By May 2023, revenue climbed further to $136.11 billion, marking one of the better quarters recently.
From the first value in August 2020 to the last in May 2023, the revenue reveals a decline, corresponding to a negative growth rate when calculated based on the starting and final values. This points toward consistency due to a broad downward trend overlaid with regular cyclical fluctuations.
It's noteworthy, however, that the recent upturn in revenue during the early months of 2023 could signal a reviving pattern. Future reporting periods will be crucial for WBA to confirm if this is a sustained rebound or a temporary fluctuation.
The gross margin of WBA fluctuated between 19.6% and 22% over the past three years:
- In August 2020, the gross margin was 20.1%.
- By November 2020, the gross margin decreased slightly to 19.7%.
- The gross margin trend continued similarly till May 2021, when it reached again at 20.2%.
- The highest gross margin occurred in February 2022, when it peaked at 22%.
- It then experienced a slight decline to 21.8% in May 2022.
- After another brief increase in August 2022, marking 21.3%, it started to decline noticeably.
- As of November 2022, the gross margin became lower than the first recorded period at 20.9%.
- By February 2023, it dropped to 20.2%, indicating a significant decrease after the peak.
- The latest available gross margin data in May 2023 shows the margin at a three-year low of 19.8%.
When evaluating the overall growth rate, there is a decline of approximately 0.3% from the initial value in August 2020 (20.1%) to the last value in May 2023 (19.8%). This represents a moderate downward trend over three years, despite the fluctuations seen during this period. It is crucial to monitor such trends for better financial forecasting.
The data series describes the Dividends Per Share (DPS) of WBA. Analyzing the trend and fluctuations over the period, come up with the following key points:
- The initial DPS reported in August 2020 was $1.84.
- Throughout the observed period, there has been a consistent upward trend in the DPS. The increases are steady and subtle, indicating stability and sustainable growth.
- By November 2020, the DPS saw a slight increase to $1.85. This continual upward progression continued, peaking at $1.92 in May 2023.
- The overall growth rate from August 2020 to May 2023 is approximately 4.35% when measuring the last value from the first.
- Despite the generally positive trend, fluctuations do exist. For example, the growth rate between consecutive months varied but remained generally positive.
- In terms of recent performance, with an emphasis on the DPS in the latest month (May 2023), we see that the DPS climbed to $1.92 per share, which is slightly higher than its previous month’s $1.917.
In conclusion, with a gradual and steady increase in DPS over time, WBA has consistently delivered growth for its shareholders. This trend indicates a potentially promising profit return for those invested in WBA.
The analyst price target for WBA experienced several fluctuations over the reported period from November 2021 through July 2023. The main trends are as follows:
- Stability, then Decay: The price target remained stable at $55 from November 12, 2021, until December 23, 2021, after which it saw gradual decreases until April 15, 2022, reaching down to $50. Another decline was observed till June 3, 2022, bringing the value down to $49.8.
- Sharp drop: Post-June 2022, a drastic decrease in target price was seen, ending up at $43 by July 29, 2022, and remaining constant in that range through September 30, 2022.
- Fall, Recovery, and Stability: There was another fall in October 2022, with a steep drop down to $38.2 by October 28, 2022. However, the value recovered somewhat, reaching $41 in December 2022 and remaining fairly stable around $40-41 through February 2023.
- Minor increase and Recent Decline: Minor fluctuations occurred from February 3, 2023, until April 7, 2023, seeing a small rise up to $40.7. Following this period, the value steadied back down to $40 and held there until June 2023. The last measurement in this series shows a final significant decrease to an analyst price target of $35.2 as of July 7, 2023.
Between the first data point on November 12, 2021, and the last on July 7, 2023, the price target decreased from $55 to $35.2, a decline of roughly 36%. This indicates an overall negative growth rate for the period under consideration.
Analyzing Walgreens Boots Alliance's Share Price Fluctuations: January-July 2023
Based on the data, WBA's share prices from January to July 2023 displayed a general downward trend, with some fluctuations in between. The prices initially hovered around $36, decreased over time, and ended up around $29 by July. This suggests a decelerating growth rate over this period. Here is a chart of WBA's price over the past 180 days.
Analyzing Walgreens Boots Alliance's Six-Month Performance through POWR Ratings
WBA is part of the Medical - Drug Stores category of stocks. Based on the data, here are some key points about its POWR Ratings grade:
- From January 14, 2023, to July 6, 2023, WBA has maintained a consistent POWR Grade of C (Neutral).
- This grade suggests average performance compared to other stocks within the same sector and is neither strong nor weak.
- Despite the average POWR Ratings grade, WBA holds a relatively high rank in its category, consistently coming in third out of four total stocks from January 2023 to July 2023.
In summary, as of the latest data ending in July 2023, WBA holds a steady and middling POWR Grade of C (Neutral), suggesting reasonable stability within its sector, albeit with average performance.
At the same time, it ranks reasonably well within the Medical - Drug Stores category, indicating that while its performance may not stand out significantly in the larger context, it still positions favorably among its narrower category peers.
WBA has notable POWR Ratings across three key dimensions: Growth, Stability, and Value. The Growth dimension exhibits a strong upward trend over the observed period, consistently improving its rating value from 52 in January 2023 to a peak of 99 in July 2023. This highlights an overall strong increase in WBA’s growth potential.
In contrast, the Stability dimension sees slight variances but remains relatively stable throughout. It begins with a rating of 68 in January 2023 and maintains values around this point, ending with a slightly lower rating of 65 in July 2023. This suggests that WBA had lingering stability during this period.
Lastly, Value provides a somewhat unclear trend. Initially, in January 2023, it begins with an impressive value of 66, drops to 55 in April 2023, and ascends to 59 in June and May 2023 before settling at 64 in July 2023. This shows some volatility, though its high values emphasize the relative worth given to WBA according to the dimension's criteria.
Here are the specific values for these three dimensions for the first and last months observed:
- January 2023:
- Growth: 52
- Stability: 68
- Value: 66
- July 2023:
- Growth: 99
- Stability: 65
- Value: 64
These POWR Ratings provide important insights into WBA's performance on key measures over a six-month period.
How does Walgreens Boots Alliance, Inc. (WBA) Stack Up Against its Peers?
Other medical stocks that may be worth considering are Novo Nordisk A/S (NVO), Johnson & Johnson (JNJ), and CVS Health Corporation (CVS) - they have better POWR Ratings.
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WBA shares were trading at $29.34 per share on Friday afternoon, up $0.23 (+0.79%). Year-to-date, WBA has declined -19.22%, versus a 16.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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