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Walgreens (WAG - Analyst Report) is set to report third-quarter fiscal 2013 results before the opening bell on Tuesday, Jun 25. In the second quarter, this drug retail giant posted a 1.05% positive earnings surprise after two consecutive misses. Let’s see how things are shaping up prior to the announcement.

Factors to Consider this Quarter

As reported earlier, Walgreens’ total sales came in at $18.34 in the third quarter of fiscal 2013. Despite sales growth of 3.3% year over year, the quarterly sales trailed the Zacks Consensus Estimate for the fifth time in a row.

Nonetheless, the company witnessed higher comparable store sales and front-end comparable store sales. Additionally, comparable pharmacy sales improved in the third quarter.

As it crossed the halfway mark of fiscal 2013, things started looking up for Walgreens. Following the reconciliation with Express Scripts Holding Company (ESRX - Analyst Report), Walgreens is sanguine about increasing returns of customers. This is reflected in the higher number of prescriptions filled at the company’s comparable stores in the third quarter.

Walgreens’ timely progress to deliver first-year synergy targets following its Alliance Boots deal in encouraging. Notably, the company’s third-quarter numbers will reflect whether its deal-making spree is paying off.

However, the generic wave in the pharmaceutical industry continues to hurt revenues. The company also faces tough industry conditions and competitive headwinds.

Earnings Whispers?

Our proven model does not conclusively show that Walgreens will likely beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) as well as a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks Earnings ESP: The Most Accurate Estimate stands at $0.90 while the Zacks Consensus Estimate is also at $0.90. This comes to a difference of 0.00%.

Zacks Rank #3 (Hold): Walgreens carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that these have the right combination of ingredients to post an earnings beat this quarter:  

Haemonetics Corporation (HAE - Analyst Report), Earnings ESP of +2.13% and a Zacks Rank #1 (Strong Buy)

ResMed Inc. (RMD - Analyst Report), Earnings ESP of +4.84% and a Zacks Rank #3 (Hold)

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