KR

Kroger Company (The)

47.21
USD
0.04%
47.21
USD
0.04%
38.22 62.78
52 weeks
52 weeks

Mkt Cap 35.11B

Shares Out 743.64M

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Walgreens (WBA) Q3 Earnings: What to Expect

Walgreens Boots Alliance (WBA) is set to report third quarter fiscal 2022 earnings results before the opening bell Thursday. Purely from a numbers perspective — whether gross margin or revenue growth — Walgreens has executed relatively well given the obstacles it has faced, namely weak store traffic and supply chain headwinds. Aside from producing solid results in the first two quarters of the year, Walgreens also boosted its profit forecast and is now expecting earnings growth seen around 10%. Notably, the company has found ways to offset downbeat foot traffic amid rising inflation with strong solid front-end revenue. However, that performance has not been reflected in the stock price, which has fallen 21% year to date and 19% over the past six months. The health and wellness company has been working to simplify and transform its business. That strategy, which includes initiatives in both the U.S. and internationally, has likely driven revenue growth in the just-ended quarter. One of the initiatives was forming the new Walgreens Health business. The goal of this business was to bring a sort of personalized, whole-person healthcare to various communities across America. The company also recently sold 6 million shares of AmerisourceBergen Corporation common stock for $150 per share, generating proceeds of nearly $900 million. All told, operating more than 9,000 retail locations across America, Puerto Rico and the U.S. Virgin Islands, Walgreens valuation is attractive at current levels, given the growth the company is poised to realize over the next several quarters. Assuming another top- and bottling beat on Thursday, WBA stock could be a bargain for the foreseeable future. And finding an acquirer for its Boots chain will certainly be a positive. For the three months that ended May, Wall Street expects the Walgreens to earn 92 cents per share on revenue of $32.23 billion. This compares to the year-ago quarter when earnings came to $1.38 per share on $34.03 billion in revenue. For the full year, ending October, earnings are projected to rise 2.24% year-over-year to $5.03 per share, while full-year revenue of $131.79 billion would decline 0.5% year-over-year. Roughly 76% of the company’s revenue and operating profit in the previous two quarters have come from the U.S. pharmacy business, compared to 7% from International revenue. The remaining 24% comes from retail sales. It’s a highly competitive environment that is expected to grow at a compound annual rate of 6.3% in the next six year, with a potential market size of $861.67 billion. Large rivals which includes CVS Pharmacy (CVS), Walmart (WMT), Kroger (KR), among others, are bidding for that market. CVS leads the pharmacy industry on prescription revenue with $122.6 billion, while Walgreens is second with $90.3 billion in revenue. This is why Walgreens’ new Walgreens Health segment will be crucial to its future success. Described as "a technology-enabled care model powered by a nationally scaled, locally delivered healthcare platform,” Walgreens Health aims to drive better health outcomes and make healthcare more affordable and accessible. Until then, Walgreens must rely on its current operations, which is doing pretty well currently. In the second quarter, the company beat on both the top and bottom lines with revenue rising 3% year over year to $33.76 billion, surpassing Street estimates by $430 million. Adjusted EPS was $1.59, topping estimates by 19 cents. This was the company’s seventh straight bottom-line beat, driven by 15% growth in retail same-store sales. Just as impressive, same-store sales from its Boots retail segment rose 22%. On Thursday investors will look for Walgreens to provide additional doses of solid execution. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.

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