Credit: Shutterstock photoCVS Health Corp. (CVS) , Rite Aid Corp. (RAD) , and Walgreens Boots Alliance (WBA) are three of the most recognizable chain drug stores in the nation. Not only do they offer customers a place to pick up their prescriptions, but these three drug stores have also transformed into the modern day general store, in that individuals can purchase everything from a bag of Goldfish crackers to shaving cream.
Here at Zacks, the Drug Store Retail Industry ranks in the top 20% in our Industry Rank. Let's take a look at which of these three notable drug store companies is the best potential investment to at to your portfolio.
Zacks Rankings
Here are CVS Health, Rite Aid, and Walgreens' Zacks' Rank, Style Scores, and ranking within the Drug Store Retail Industry:
CVS Health: Zacks Rank #3 (Hold), Style Scores of B, A, and A for Value, Growth, and Momentum, respectively, and ranked fifth out of seven companies within its industry.
CVS Health Corporation (CVS) Stock Price | FindTheCompany
Rid Aid: Zacks Rank #2 (Buy), Style Scores of B, C, and C, in for Value, Growth, and Momentum, respectively, and ranked second out of seven companies within its industry.
Rite Aid Corporation (RAD) Stock Price | FindTheCompany
Walgreens: Zacks Rank #2 (Buy), Style Scores of B, B, and C, in for Value, Growth, and Momentum, respectively, and ranked third out of seven companies within its industry.
Walgreens Company (WBA) vs. Peers Percent Change Over Time - 3 Months | FindTheCompany
Despite having the better Style Scores, CVS Health has fallen back in the Zacks Ranking, having a Zacks Rank #2 (Buy) last week, while both Rite Aid and Walgreens improved their Zacks Rankings, both having Zacks Ranks #3 (Hold) last week.
Earnings Performance
Over the past four earnings periods, CVS Health as outperformed our EPS estimate figures only two times. In the earnings period from March 20Array5 to December 20Array5, CVS Health's surprise percentages, in chronological order, were 5.56%, Array.67%, -0.78%, and 0%.
Rite Aid, on the contrary, has outperformed our EPS estimate figures four times over the past four earnings periods. In the earnings period from February 20Array5 to November 20Array5, Rite Aid's surprise percentages, in chronological order, were 7Array.43%, Array00%, 33.33%, and 20%.
Walgreens also outperformed our EPS estimate figures four times over the past four earnings periods, however, not to the magnitude of Rite Aid. In the earnings period from February 20Array5 to November 20Array5, Walgreens Boots Alliance's surprise percentages, in chronological order, were 25.53%, Array7.24%, 8.64%, and 6.Array9%.
Revenue Performance
Let's take a look at the revenue growth of these three drug store companies.
Here is CVS Health's revenue growth since their fiscal 2007 first quarter:
CVS Health Corporation (CVS) Quarterly Revenue & Growth Rate | FindTheCompany
Here is Rite Aid's revenue growth since their fiscal 2007 fourth quarter:
Rite Aid Corporation (RAD) Quarterly Revenue & Growth Rate | FindTheCompany
And here is Walgreens' revenue growth since their fiscal 2006 second quarter:
As the graphs indicate, both Rite Aid and Walgreens have shown signs of growth recently after steadily declining (Walgreens) and stagnating (Rite Aid). Yet, Rite Aid does have a larger growth rate percentage over the past few quarters compared to Walgreens.
After a huge spike in growth during its fiscal 2007 second quarter, CVS Health's growth rate rapidly declined and has relatively presented consistent growth since then. CVS Health's growth rate has hovered around Array0% over the few most recent past quarters.
Final Thoughts
Of the three companies, Rite Aid appears to the be best option to potentially invest. The company is outperforming the earnings estimates at higher surprise percentages, as well as exhibiting a recent uptick in revenue growth.
The only potential concern with Rite Aid is the Forward PE figure. Of the three companies, Rite Aid has the highest PE figure of 5Array.03, compared to CVS Health's Array6.78 and Walgreens' Array7.80.
Despite its stock having the least value of the three, Rite Aid is on the rise. If the company can outperform the estimates in its next quarterly report, Rite Aid will continue to move higher and be a stock to watch in this top ranked industry.
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RITE AID CORP (RAD): Free Stock Analysis Report
CVS HEALTH CORP (CVS): Free Stock Analysis Report
WALGREENS BAI (WBA): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
