NYSE:CVS
$32.58
(2/9 11:09AM)
-0.4%
| Open | $33.21 |
Mkt Cap | $46.2 Billion |
| High | $33.55 |
52Wk High | $38.27 |
| Low | $32.39 |
52Wk Low | $23.74 |
| Volume | 6.2 Million |
Avg Vol 10D | 15.1 Million |
CVS Stock Evaluation
As discussed in our Recommendation Summary, we have reiterated our Undervalued on CVS at this time. There has been a relatively large decline in price over the last week of 4.02%, but there has not been any additional guidance on earnings from CVS. We are specifically looking for more attractive valuations for CVS before we would consider any change to our recommendation. So, while a decrease in price of this magnitude is a step toward a more positive valuation, we have not reached our valuation thresholds yet.
Recommendation Summary
As frequent users of Ockham Research are aware, we strive to adhere to the principal of Ockham's Razor. This company ideal drives us to keep our stock analysis as simple as possible, but of course, no simpler than is necessary. It is in that vein that we focus much of our analysis on fundamental factors, peer analysis, and valuations versus historically normal ranges. However, we also apply standard deviation and volatility studies for each index and sector in order to understand more completely the risks associated with each market environment.
As the market has enjoyed a pretty nice run in the last 12 months, we are not too terribly concerned about the long term value being diminished by this run up. We are becoming more cautious in general, but we are holding this stock's rating steady because it has strong fundamentals that justify the price it is receiving in the open market right now, but it could be in jeopardy of getting downgraded if it becomes too expensive.
It is often helpful to begin our analysis with recent price changes, the price of CVS declined from $32.37 as of 01/30/2010 to a price of $31.07 as of 02/07/2010. While this decrease of 4.02% was not large enough for Ockham to upgrade the stock, it does however slightly increase the attractiveness of CVS, assuming that the fundamentals remain at current levels.
As of this report, there have been no meaningful adjustments in cash earnings expectations or guidance in the last week.
CVS Revenue
Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, CVS the high and low end of the Price to Sales per share ratios are 0.74x and 0.47x respectively.
Notice that CVS's current Price to Sales per share ratio is 0.45x, which is well below its normal historic Price to Sales levels. At a price of $31.07, CVS is 26% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.
CVS Cash Earnings
As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of CVS, Ockham views their current Cash Earnings as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for CVS, the current level of Cash Earnings compared to its historical levels helps identify where CVS is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 15.40 and a historical low Cash Earnings per share ratio of 9.78, an investor can relate where value becomes optimal.
So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for CVS? From the Ockham perspective, we are looking specifically at CVS to see if the market is recognizing the huge disparity between CVS's past stock price to Cash Earnings ratio to today's levels. At a difference of 31% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at CVS. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.
CVS Dividends
While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.
In CVS’s case, the estimated annual dividend is $0.35 resulting in a current dividend yield of 1.13%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from CVS against the historic high and low levels over the past 10 years. The highest dividend yield from CVS over this period was 1.47% while the lowest dividend yield was 0.38% If you are looking for some “bang for your buck” then a dividend yield of 22.16% above the historical median should be enticing. CVS receives a positive boost in our view because as you know, equity at its core is simply a claim on future dividends.
CVS News Mentioned on Zero Hedge Recently
As always, the latest news on CVS is available to Ockham clients through RazorWire, and it was mentioned recently on Zero Hedge.
Based on our methodology, CVS Caremark Corporation should hold some appeal to value investors as we view it as Undervalued. We noticed recently that in comparison to all other stocks we analyze in the news; CVS has received less coverage from the financial media in business television and blogs. The latest news on CVS has created quite a stir as the stock is trading $1.65 higher in today's session. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey.
“… CVS CAREMARK's Q4 net rises 10% to $1. 05B as revs rose 7% to $25. 8B. Edison SpA's 2009 net falls 31% to €240M amid weaker natural gas and electricity ops. …”
Stocks in the News: CVS Caremark Corporation Among the Twenty Most Discussed Stocks
Something important is going on with CVS today, as it is getting a lot of attention on business television and influential blogs.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, CVS has been less covered in the news compared to the rest of our universe of stocks. Check the news on this stock because there is a catalyst that has allowed this stock to advance 6.16% today. The Motley Fool CAPS data suggests that investors believe CVS Caremark Corporation will beat the market in the foreseeable future. We consider CVS as Undervalued at the current price of $32.98. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.
“… Take a look at CVS CAREMARK, home home depot gets an upgrade. Cit naming john thain as its new ceo. > > two years ago wall street pumped $90 million to the democrats. …”
Stocks to Watch: CVS Heavily Covered on WSJ Marketbeat
Something important is going on with CVS today, as it is getting a lot of attention on business television and influential blogs.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, CVS has been less covered in the news compared to the rest of our universe of stocks. Check the news on this stock because there is a catalyst that has allowed this stock to advance 6.21% today. The Motley Fool CAPS data suggests that investors believe CVS Caremark Corporation will beat the market in the foreseeable future. We consider CVS as Undervalued at the current price of $33.00. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise.
“… CVS CAREMARK Corp. ’s fourth-quarter earnings rose 10% amid stronger sales at its pharmacy businesses while the hybrid drug-store pharmacy benefit manager’s chief executive ... …”
CVS Back in the News on Fox Business
It's been at least a month since we noticed any major news coverage of CVS, so the story in Fox Business may get the ball rolling.
Based on our methodology, CVS Caremark Corporation should hold some appeal to value investors as we view it as Undervalued. The latest news on CVS has created quite a stir as the stock is trading $1.83 higher in today's session. We noticed recently that in comparison to all other stocks we analyze in the news; CVS has received less coverage from the financial media in business television and blogs. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey.
“… Also CVS CAREMARK, caremark, this is one of the biggest movers in the s&p 500, helping that index to outperform the broader market. …”
Squawk On The Street: Discussion of CVS's Earnings
The name of the game in business is profit, and we always pay attention for CVS news as it relates to earnings.
The latest news on CVS has created quite a stir as the stock is trading $2.28 higher in today's session. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey. Based on our methodology, CVS Caremark Corporation should hold some appeal to value investors as we view it as Undervalued. We noticed recently that in comparison to all other stocks we analyze in the news; CVS has received less coverage from the financial media in business television and blogs.
“… Elsewhere, mixed reports on the earnings front, CVS CAREMARK did well but less than expected growth in the pharmacy services business. …”
See More News on CVS from Squawk On The Street
The latest news from Squawk On The Street on CVS is available through Ockham's news analytics platform RazorWire.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, CVS has been less covered in the news compared to the rest of our universe of stocks. We consider CVS as Undervalued at the current price of $32.19. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise. The Motley Fool CAPS data suggests that investors believe CVS Caremark Corporation will beat the market in the foreseeable future.
“… Same thing for CVS CAREMARK as well as express grip. Cvs up about a buck today good for 3%. Express scripts 5%. Both go to buy at goldman sachs. …”
Interested in CVS? See What the Pundits Said on Imus In The Morning
Wrote recently formed is under investigation by the ftc them started in august. Various groups past the government to look into CVS CAREMARK that it bought the benefit service and there has been changes including higher prices and compromised quality of care purpose citigroup planning the ipo of the primerica life insurance unit is of shares earlier it tried
“… are purpose citigroup planning the ipo of the primerica life insurance unit is of shares earlier it tried …”
First CVS News on Happy Hour in More Than a Month
Earnings. In an earnings conference call, cisco ceo john chambers gave a hopeful but cautious assessment about on the flipside, CVS CAREMARK was the s&p's biggest decliner down 20% though it beat forecasts. The drugstore lost billions worth of contracts in the pharmacy benefit segment. The s&p retail index was up 1.1% after a mix of same store retail sales numbers came in highlighted by high-end department stores
“… n the pharmacy benefit segment. The s&p retail index was up 1.1% after a mix of same store retail sales numbers came in highlighted by high-end department stores …”
CVS's Back in the News After More than a Month on Fox Business
Commercial break. Sorry, folks. The intraday high was a gain of 191 points. Gotta tell you the biggest loser stock of the day, CVS CAREMARK. Down 20%. It's the chain. Reported a 39% profit -- an increase in profit but it took $2 billion worth of losses from its pharmacy benefit unit and as a result the ceo says cvs will not reach its goals for next down goes the stock 20%. We talked a lot about coal this
“… om its pharmacy benefit unit and as a result the ceo says cvs will not reach its goals for next down goes the stock 20%. We talked a lot about coal this …”
CVS Caremark Corporation (CVS) Discussed on CNBC's Squawk On The Street
CVS Caremark Corporation is in the news. Find out how this impacts CVS trading on Ockham Research.
Newspaper publisher left alive estimated q3 results will beat the street s newspaper ad market getting better? Walgreens, "the new york times," citigroup and CVS CAREMARK all >> today on street sign, ronald kirk gets an exclusive interview with the obama key man on trade >> on street signs. National car rental knows i'm picky.So, at national, I go right past the counter... And you get to choose choose any car? Seriously,you choose.Okay.
“… key man on trade >> on street signs. National car rental knows i'm picky.So, at national, I go right past the counter... And you get to choose choose any car? Seriously,you choose.Okay. …”