) is slated to release its first quarter 2013 earnings results on
Friday, December 21, 2012, before the market opens. The Zacks
Consensus Estimate currently stands at 67 cents per share for the
quarter. This represents year-over-year growth of 6.3%.
With respect to earnings surprises, Walgreens edged past the
Zacks Consensus Estimate in one of the trailing four quarters and
reported in-line earnings result in one of the quarters. The
average surprise over the last four quarters remained negative at
Walgreens has already reported sales for the first quarter of
2013. Total sales in the first quarter came in at $17.34 billion,
down 4.5% year over year and trailing the Zacks Consensus
Estimate of $17.63 billion, missing the top-line Zacks Consensus
Estimate for the third time in a row.
Previous Quarter Synopsis
Walgreens reported a 4.5% year over year decline in adjusted
earnings per share in the fourth quarter of fiscal 2012 to 63
cents. However, it was well ahead of the Zacks Consensus Estimate
of 55 cents.
Total sales decreased 4.9% year over year to $17.1 billion in the
fourth quarter. The decline was primarily attributed to the
generic wave in the pharmaceutical industry. Front-end comparable
store sales (those open for more than a year) dropped 1.3% while
prescription sales (63.3% of total revenues) dipped 8.1% in the
Agreement of Analysts
Estimate revision trends reflect a bearish sentiment towards the
company's earnings for the first quarter of fiscal 2013. Over the
last 30 days, 6 out of the 14 estimates were revised downwards
with no upward revision for the quarter.
Walgreens' dismal performance in recent months coupled with
concerns regarding the company's performance in the coming
quarters underlines the absence of any positive movement,
depicting a lack of driving events. While the reconciliation with
) is comforting, Walgreens' ability to win back customers remains
a looming concern.
Magnitude of Estimate Revisions
The magnitude of the estimate revisions for Walgreens depicts a
slightly negative bias for the upcoming quarter. The Zacks
Consensus Estimate dropped three cents over the last 30 days and
a penny in the last 7 days to 67 cents for the first quarter.
While fiscal 2012 was a challenging year for Walgreens, we look
forward to fiscal 2013 as near-term headwinds wane. Despite a
lukewarm start to fiscal 2013, the company has a broad-based
platform to drive growth going forward. Moreover, the company has
left no stone unturned to bolster sales, ranging from a customer
loyalty program to stimulate consumer demand to resorting to
In a small way, the stock inched towards a 52-week high of $37.35
on December 17, 2012. We currently have a long-term 'Neutral'
recommendation on the stock which carries a short-term Zacks #3
Rank (Hold). Its peer
) carries a Zacks #2 Rank (Buy).
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