NYSE:WAG
$33.70
(2/9 3:12PM)
+1.2%
| Open | $33.55 |
Mkt Cap | $32.8 Billion |
| High | $33.84 |
52Wk High | $40.69 |
| Low | $33.41 |
52Wk Low | $21.39 |
| Volume | 5.3 Million |
Avg Vol 10D | 10.5 Million |
WAG Stock Evaluation
In this week's report, we are reiterating our Undervalued rating on WAG. In the last week there has been no revisions made to earnings expectations, but our valuation has obviously been influenced by the decrease in price of 7.60%. While that price decrease has not caused an upgrade this week, we will continue to closely monitor the fundamentals in case a future change in rating is warranted. The complete fundamental analysis of WAG follows below.
Recommendation Summary
We are reaffirming our Undervalued rating for the time being because there have been no major changes in our analysis in the last week. In the following report we will look at the stock versus itself historically, which is clearly useful in order to evaluate if a security is overvalued or undervalued. In addition, we analyze the stock as a member of the Consumer Services sector and the market as a whole to understand the volatility and risk and reward potential.
In the last twelve months the NYSE has made some gains that start to make a value investor slightly cautious about the future. We are leaving our rating for WAG unchanged this week even as the Consumer Services sector has actually outperformed the broad market's appreciation. At least in this stock's case, the fundamentals are improving at a rate capable of justifying the stock price appreciation for the time being.
As far as price is concerned, a decrease has occurred in WAG's price from $36.05 as of 01/30/2010 to a price of $33.31 as of 02/07/2010. This decrease of 7.60 will not cause an upgrade this week, but it may demonstrate an increase in the attractiveness of WAG should the fundamentals hold at their current levels or better.
Second, since our last report, there have been no significant adjustments in earnings expectations or guidance.
WAG Revenue
As a value investing shop, we are interested in seeing how WAG's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 1.03x and the low end of the range at 0.74x.
With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for WAG of 0.51x is well below its normal historic Price to Sales levels. At a price of $33.31, WAG is 43% 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.
WAG 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 WAG, Ockham views their current Cash Earnings as significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for WAG to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 21.34 and a 15.28 low over the same period.
Now that WAG’s current price is $33.31 and its Price to Cash Earnings ratio is 10.64, we are very positive on its outlook from the cash earnings perspective. In fact, WAG is now trading a full 42% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why WAG has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.
WAG Dividends
A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations.
Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from WAG against the historic high and low levels over an available data range. Because WAG has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In WAG’s case, the estimated annual dividend is $0.55 producing a current dividend yield of 1.65%. The highest dividend yield from WAG in recent history was 2.57% while the lowest dividend yield was 0.31%. Therefore, the current dividend yield of WAG is above the historical median by 14.58%. This is definitely a positive in our view.
See More News on WAG from Closing Bell
The latest news from Closing Bell on WAG is available through Ockham's news analytics platform RazorWire.
At present, Ockham has a valuation stance of Undervalued on WAG, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Walgreen Company has actually sunk a bit in comparison to the others. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey.
“… about that sector and use see growth there? >> wvs and WALGREEN's. I like WALGREEN's better. Both of these companies are …”
See Who is Talking About News from WAG on Mad Money
As always, the latest news on WAG is available to Ockham clients through RazorWire, and it was mentioned recently on Mad Money.
Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey. At present, Ockham has a valuation stance of Undervalued on WAG, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue. However, the WAG has fallen in price since the report, and barring a change in fundamentals could be upgraded on our next report. Investors are headed for the exit following today's news as the stock is trading down $3.39. When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Walgreen Company has actually sunk a bit in comparison to the others.
“… First, monday morning, cvs care market, you probably shop there if you don't shop at WALGREEN's. If they execute they have not been executing. …”
Earnings News Regarding Walgreen Company Noted on The Razor's Edge
Whenever news breaks regarding earnings or earnings per share data, we pay close attention.
As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, WAG has been less covered in the news compared to the rest of our universe of stocks. We considered WAG as Undervalued as of our latest report at $36.05. According to our methodology, this stock has appreciation potential based on current fundamentals which only improves if earnings or revenue surprise or the price falls as it has recently. Please be aware that WAG is trading off $3.73 today, and is clearly being affected by the latest news. The Motley Fool CAPS data suggests that investors believe Walgreen Company will beat the market in the foreseeable future.
“… That helped boost CVS earnings per share by 20 percent in 2007 and WALGREEN’s by 19 percent in the fiscal year that ended in August 2007. …”
WAG Profits on the Mind of The Razor's Edge
Earnings or profits are the most key fundamental factor that an investor to be aware of for any stock. We noticed The Razor's Edge discussed earnings on WAG.
When taking into account the amount of news coverage each stock normally sees as a percentage of the total, Walgreen Company has actually sunk a bit in comparison to the others. At present, Ockham has a valuation stance of Undervalued on WAG, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue. However, the WAG has fallen in price since the report, and barring a change in fundamentals could be upgraded on our next report. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey. Investors are headed for the exit following today's news as the stock is trading down $3.73.
“… com 2/5/2010 Current analysts’ estimates call for CVS to grow earnings by 11% in 2011 and 14% in 2012, and WALGREEN is expected to grow at 17% in both years. …”
Stay Current on WAG's News on Mad Money
The latest news from business television and influential blogs is always available through Ockham's RazorWire, and this news is in relation to Walgreen Company.
Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey. We noticed recently that in comparison to all other stocks we analyze in the news; WAG has received less coverage from the financial media in business television and blogs. Based on our methodology, Walgreen Company should hold some appeal to value investors as we view it as Undervalued.
“… WALGREEN's is good. Procter & gamble, that was an unbelievable quarter and the stocks should be much higher. Exxon mobil is in the cross hairs of the government. …”
WAG's Dividends Mentioned by Countdown to the Closing Bell
If WAG's dividends are important to you, take a look at the news as they were the topic of conversation on Countdown to the Closing Bell.
Based on our methodology, Walgreen Company should hold some appeal to value investors as we view it as Undervalued. A significant sell off of $2.14 is underway right now, so investors in WAG should pay close attention to the news. We noticed recently that in comparison to all other stocks we analyze in the news; WAG 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.
“… Not very good news for shareholders and WALGREEN's, chicago-based company by sales decline of 1. 1% last month. Those are your seven late. …”
Countdown to the Closing Bell Brings News Related to Walgreen Company
Walgreen Company is one of the thousands of companies that Ockham has news analytics on, and it was recently discussed on Countdown to the Closing Bell.
At present, Ockham has a valuation stance of Undervalued on WAG, as we could see significant price appreciation based on current fundamentals like cash earnings and revenue. Investors are headed for the exit following today's news as the stock is trading down $2.52. In comparison to the other stocks that we follow, Walgreen Company has seen more discussion in relation to its normal ranking among the group. Be aware that the news sources we track are focusing on this stock more often these days. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey.
“… Expected to gain the introduction of new generic drugs the last year so WALGREEN's down $2. 52. Now bringing in the traders at new york stock exchange and ... …”
Check Out Happy Hour and News on WAG
The latest news from Happy Hour on WAG 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, WAG has been less covered in the news compared to the rest of our universe of stocks. We consider WAG as Undervalued at the current price of $36.60. 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 Walgreen Company will beat the market in the foreseeable future.
“… Rebecca: my question, I shop at WALGREEN's. Com I can compare. I go for lowest prices. I'm not partial to one brand, for particular stuff. …”
See Who is Talking About News from WAG on Bulls & Bears
Walgreen Company is one of the thousands of companies that Ockham has news analytics on, and it was recently discussed on Bulls & Bears.
Based on our methodology, Walgreen Company should hold some appeal to value investors as we view it as Undervalued. Ranking all stocks in terms of news coverage offers some interesting data. In the case of WAG, it is getting significantly more attention in recent news coverage than we are used to seeing. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey.
“… Look it, WALGREEN's greens will go from $2 a share to $3 a share in earnings. No matter what happens to the economy. If you're looking for a fraidy cat move but want to own ... …”
Closing Bell Discussed the Latest Development of Walgreen Company
As always, the latest news on WAG is available to Ockham clients through RazorWire, and it was mentioned recently on Closing Bell.
We noticed recently that in comparison to all other stocks we analyze in the news; WAG has received less coverage from the financial media in business television and blogs. Based on our methodology, Walgreen Company should hold some appeal to value investors as we view it as Undervalued. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey.
“… Danville, illinois, about 300 people for WALGREEN will be so we're just tracking the moves in those two stocks right now. …”