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Category: Walgreens Boots Alliance (WBA)
Date: 11 January 2021 Stock Price of Walgreen Boots Alliance: $45.21 We take a look at the 1st quarter earnings report of their 2021 fiscal year of Walgreen Boots Alliance a retail and wholesale pharmacy group that employs more than 440 000 people and operates over 18 700 stores. For the quarter the group reported $36.3 billion but reported a loss of -$308 million
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Executive Vice Chairman and CEO Stefano Pessina - Our first quarter results exceeded expectations as we continue to deliver on our strategic priorities. As announced yesterday we have taken a major step forward in our transformation; we are divesting our pharmaceutical wholesale business with plans to use the proceeds to accelerate our investments in healthcare"
About Walgreen Boots Alliance
Walgreens Boots Alliance (Nasdaq: WBA) is a global leader in retail and wholesale pharmacy, touching millions of lives every day through dispensing and distributing medicines, its convenient retail locations, digital platforms and health and beauty products. The company has more than 100 years of trusted health care heritage and innovation in community pharmacy and pharmaceutical wholesaling. Including equity method investments, WBA has a presence in more than 25 countries, employs more than 440,000 people and has more than 18,750 stores.
Overview of Walgreens 1st quarter 2021 earnings report
- Sales increased 5.7 percent to $36.3 billion, up 5.2 percent on a constant currency basis
- Loss per share was $0.36, compared to EPS of $0.95 in the year-ago quarter, including a $1.73 per share charge from the company's equity earnings in AmerisourceBergen;
- Adjusted EPS decreased 11.2 percent to $1.22, down 11.6 percent on a constant currency basis, reflecting an estimated adverse COVID-19 impact of $0.26 to $0.30 per share
- Net cash provided by operating activities was $1.2 billion, an increase of $134 million; Free cash flow was $763 million, an increase of $90 million, or 13 percent
- Inventories: $11.18 billion
- Stockholders equity of Walgreens Boots Alliance: $20.56 billion
- Stockholders equity per share for Walgreens Boots Alliance : $23.76
- So Walgreens Boots Alliance is trading at 1.9 times it stockholders equity per share which is well outside the expected range of between 3 and 6 times most companies tend to trade at.
- To put this into context the Dow Jones constituents have an average price to book value of 4.9 times.
- Cash provided by operating activities: $1.195 billion
- Cash provided by operating activities per share: $1.38
Walgreens Boots Alliance management commentary on their 1st quarter 2021 earnings
DEERFIELD, Ill.--(BUSINESS WIRE)-- Walgreens Boots Alliance, Inc. (Nasdaq: WBA) today announced financial results for the first quarter of fiscal 2021, which ended Nov. 30, 2020.
Executive Vice Chairman and CEO Stefano Pessina said, "Our first quarter results exceeded expectations as we continue to deliver on our strategic priorities. As announced yesterday we have taken a major step forward in our transformation; we are divesting our pharmaceutical wholesale business with plans to use the proceeds to accelerate our investments in healthcare. While the business environment remains challenging, we are rising to the occasion with agility and discipline and we are confident in our outlook for adjusted EPS for the fiscal year. Our role in the healthcare system has never been more important, as the communities we serve continue to turn to our trusted brands and expert pharmacists. I am so proud of our teams and the historic and critical role they are playing to help the world emerge from the pandemic, administering COVID-19 vaccinations to frontline healthcare workers and vulnerable members of our society."
Executive Vice Chairman and CEO Stefano Pessina said, "Our first quarter results exceeded expectations as we continue to deliver on our strategic priorities. As announced yesterday we have taken a major step forward in our transformation; we are divesting our pharmaceutical wholesale business with plans to use the proceeds to accelerate our investments in healthcare. While the business environment remains challenging, we are rising to the occasion with agility and discipline and we are confident in our outlook for adjusted EPS for the fiscal year. Our role in the healthcare system has never been more important, as the communities we serve continue to turn to our trusted brands and expert pharmacists. I am so proud of our teams and the historic and critical role they are playing to help the world emerge from the pandemic, administering COVID-19 vaccinations to frontline healthcare workers and vulnerable members of our society."
Overview of First Quarter Results
WBA had fiscal 2021 first quarter sales of $36.3 billion, an increase of 5.7 percent from the year-ago quarter, and an increase of 5.2 percent on a constant currency basis1, reflecting growth in Retail Pharmacy USA and Pharmaceutical Wholesale.
The company had an operating loss of $440 million in the first quarter, compared to operating income of $1.0 billion in the same quarter a year ago, entirely due to a $1.5 billion charge from the company's equity earnings in AmerisourceBergen. Adjusted operating income was $1.3 billion, a decrease of 9.9 percent from the same quarter a year ago and a decrease of 10.1 percent on a constant currency basis.
Net loss attributable to WBA2 was $308 million for the first quarter of fiscal 2021 compared with net profit of $845 million in the same quarter a year ago. The loss was entirely due to the AmerisourceBergen charge. Loss per share was $0.36, compared to earnings per share (EPS) of $0.95 in the same quarter a year ago.
Adjusted net earnings decreased 13.9 percent to $1.1 billion, down 14.3 percent on a constant currency basis, compared with the same quarter a year ago. Adjusted EPS was $1.22, a decrease of 11.2 percent on a reported basis and a decrease of 11.6 percent on a constant currency basis, compared with the same quarter a year ago, reflecting an estimated adverse COVID-19 impact of $0.26 to $0.30 per share.
Net cash provided by operating activities was $1.2 billion in the first quarter and free cash flow was $763 million, an increase of 13 percent compared with the year-ago quarter.
Company Outlook
The company maintained fiscal 2021 guidance of low single-digit growth in adjusted earnings per share at constant currency rates, with the profile skewed to opportunity:
WBA had fiscal 2021 first quarter sales of $36.3 billion, an increase of 5.7 percent from the year-ago quarter, and an increase of 5.2 percent on a constant currency basis1, reflecting growth in Retail Pharmacy USA and Pharmaceutical Wholesale.
The company had an operating loss of $440 million in the first quarter, compared to operating income of $1.0 billion in the same quarter a year ago, entirely due to a $1.5 billion charge from the company's equity earnings in AmerisourceBergen. Adjusted operating income was $1.3 billion, a decrease of 9.9 percent from the same quarter a year ago and a decrease of 10.1 percent on a constant currency basis.
Net loss attributable to WBA2 was $308 million for the first quarter of fiscal 2021 compared with net profit of $845 million in the same quarter a year ago. The loss was entirely due to the AmerisourceBergen charge. Loss per share was $0.36, compared to earnings per share (EPS) of $0.95 in the same quarter a year ago.
Adjusted net earnings decreased 13.9 percent to $1.1 billion, down 14.3 percent on a constant currency basis, compared with the same quarter a year ago. Adjusted EPS was $1.22, a decrease of 11.2 percent on a reported basis and a decrease of 11.6 percent on a constant currency basis, compared with the same quarter a year ago, reflecting an estimated adverse COVID-19 impact of $0.26 to $0.30 per share.
Net cash provided by operating activities was $1.2 billion in the first quarter and free cash flow was $763 million, an increase of 13 percent compared with the year-ago quarter.
Company Outlook
The company maintained fiscal 2021 guidance of low single-digit growth in adjusted earnings per share at constant currency rates, with the profile skewed to opportunity:
- The first quarter exceeded expectations, reflecting strength in Boots UK and Boots Opticians.
- While the second quarter is expected to see higher adverse impacts from COVID-19 (including the weaker cough, cold and flu season), the company anticipates first-half fiscal 2021 adjusted EPS to be broadly in line with prior expectations.
- On a full-year basis, the opportunity from the distribution of vaccinations is likely to be offset by COVID-19 related lock-downs and restrictions, and by increased growth investments.
Walgreens (WBA) stock price history over the last 5 years
The image below shows the stock price history of Walgreen Boots Alliance (WBA) over the last 5 years. And its not been a good time for Walgreen Boots stockholders with the stock declining by -41.5% over the last 5 years. Not the type of returns any investor would like to see.
The stock of Walgreens is trading at close to the midpoint between its 52 week low and 52 week high which to us is an indication that the short term sentiment and momentum is neutral at this point in time.
The stock of Walgreens is trading at close to the midpoint between its 52 week low and 52 week high which to us is an indication that the short term sentiment and momentum is neutral at this point in time.
Walgreens Boots Alliance (NASDAQ: WBA) latest stock valuation
So what is Walgreens Boots Alliance (NASDAQ: WBA) stock worth based on the release of their 3rd quarter 2020 earnings report? Based on their earnings report provided our valuation models provide a target price (full value price) for Walgreens Boots Alliance of $59.20 a stock (down from our last valuation of Walgreen Boots). We therefore believe that the stock of Walgreens Boots Alliance is undervalued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $59.20. So we believe a good entry point into Walgreens Boots Alliance stock would be at $53.30 or below.
Since the stock of Walgreens Boots Alliance is trading at well below our recommended entry point we believe the current sell off in world markets due to the Coronavirus has provided a great opportunity to by Walgreens Boots Alliance stock at a depressed price. We therefore rate Walgreens Boots Alliance as a buy
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $59.20. So we believe a good entry point into Walgreens Boots Alliance stock would be at $53.30 or below.
Since the stock of Walgreens Boots Alliance is trading at well below our recommended entry point we believe the current sell off in world markets due to the Coronavirus has provided a great opportunity to by Walgreens Boots Alliance stock at a depressed price. We therefore rate Walgreens Boots Alliance as a buy
Next earnings release of Walgreens Boots Alliance
It is expected that Walgreens Boots Alliance will release their 2nd quarter 2021 earnings report in early April 2021