Walgreens Boots (WBA) Stock Looks Like A Cheap, Solid Buy Right Now

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Shares of Walgreens Boots Alliance WBA jumped roughly 1.6% Monday as investors continue to dive in after it posted impressive fiscal fourth-quarter results late last week. Looking ahead, the pharmaceutical giant looks poised for strong growth and W BA stock seems like it might be worth buying right now.

Q4 Overview

Walgreens saw its adjusted fiscal fourth-quarter earnings jump 13% to hit $1.48 per share, which topped the Zacks Consensus Estimate of $1.44. The drugstore powerhouse's Q4 revenues climbed nearly 11% to reach $33.44 billion.

Walgreens' prescription business stood out in Q4, bolstered by its $4.4 billion purchase of roughly 1,900 Rite Aid RAD pharmacies earlier this year. Investors should also note that the Deerfield, Illinois-based company's share of the U.S. retail prescription market jumped from 20.2% in fiscal 2017 to 21.7%, based on data from health-care research firm Iqvia. This marked the company's highest ever annual share, while its market share hit 22.3% in Q4.

The firm said that it filled the largest number of prescriptions in its 117-year history, which helped its U.S. pharmacy sales surge 17%.

Forward-Looking Push

Now that we have quickly covered some of Walgreens' fiscal Q4 highlights it's time to look at some of the firm's recent moves that help set it up to better compete not only against CVS CVS and Target TGT but also Amazon AMZN and other giants.

Walgreens recently partnered with and took a minority stake in the subscription-based beauty firm Birchbox in order to offer more high-end cosmetics and attract more millennial customers. The firm also launched a pilot program with Kroger KR that will see it test out selling grocery offerings at Walgreens.

The company in late September launched a Boots flagship store on Alibaba's BABA Tmall platform. Plus, Walgreens purchased a 40% stake in a leading Chinese retail pharmacy chain, Sinopharm Holding GuoDa Drugstores Co. earlier this year.

Investors should also note that Walgreens offers a range of delivery and shipping options and is likely to expand these efforts going forward.


We can see that WBA stock has performed alright over the last 12 months. And he company's stock is up roughly 34% over the last five years. However, shares of Walgreens have slipped over 14% during the last 36 months. With that said, WBA's valuation picture looks impressive at the moment.

Walgreens stock is currently trading at 11.2X forward 12-month Zacks Consensus EPS estimates, which marks a substantial discount compared to its industry's 17.2X average. Plus, WBA has traded as high as 13.5X during the past year and 23.3X over the last five years. We can also see that Walgreens is trading near its five-year lows, which means WBA appears rather "cheap" at the moment.


Looking ahead, Walgreens' Q1 revenues are projected to climb by 11.1% to hit $34.16 billion, based on our current Zacks Consensus Estimate. Meanwhile, Walgreens is expected to see its adjusted quarterly earnings pop by 12.5% to reach $1.44 per share.

Bottom Line

It is also worth noting that Walgreens has earned eight positive earnings estimate revisions for its current fiscal year and the following year over the last seven days, with 100% agreement to the upside. This helps Walgreens earn a Zacks Rank #2 (Buy) at the moment. The company also rocks an "A" grade for Growth and a "B" for Value in our Style Scores system.

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Alibaba Group Holding Limited (BABA): Free Stock Analysis Report, Inc. (AMZN): Free Stock Analysis Report

Target Corporation (TGT): Free Stock Analysis Report

Rite Aid Corporation (RAD): Free Stock Analysis Report

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Walgreens Boots Alliance, Inc. (WBA): Free Stock Analysis Report

The Kroger Co. (KR): 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.

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