We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Walgreens Boots Alliance, Inc. (WBA - Free Report) reported adjusted earnings per share (EPS) of $1.36 in second-quarter fiscal 2017, up 6.1% year over year. Adjusted EPS was in line with the Zacks Consensus Estimate.
On a reported basis, net earnings came in at $1.06 billion, reflecting an increase of 13.9% from the prior-year quarter. Reported earnings came in at 98 cents, reflecting an improvement of 15.3% on a year-over-year basis.
Total Sales
Walgreens Boots recorded total sales of $29.44 billion in the fiscal second quarter, down 2.4% year over year and up 0.9% at constant exchange rate (CER). The top line missed the Zacks Consensus Estimate of $30.56 billion.
Following the earnings release, the company’s share price dropped 0.90% during pre-market trading session.
Walgreens Boots Alliance, Inc. Price, Consensus and EPS Surprise
Walgreens Boots currently reports under three operating segments: Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale.
The Retail Pharmacy USA division delivered sales of $21.81 billion in the reported quarter, reflecting an increase of 1.5% on a year-over-year basis. Within this segment, total sales at comparable drugstores rose 2.4%, while prescriptions filled in comparable stores grew 7.9% on account of Medicare Part D growth and volume growth from previously announced strategic pharmacy collaborations. On the other hand, comparable retail stores edged down 0.8% due to lower sales of consumables and general merchandise category and at the personal care category, partially offset by higher sales in the health and wellness and beauty categories.
Pharmacy sales, which accounted for 66.5% of the division’s sales in the quarter, increased 3.7% from the year-ago period, while pharmacy sales at comparable stores increased 4.2% on higher volumes.
Revenues at the Retail Pharmacy International division declined 14.5% on a year-over-year basis (down 1.9% at CER) to $3.10 billion, on account of currency fluctuations. At CER, comparable store sales in the second quarter increased 0.6% year over year, while comparable pharmacy sales fell 3.7% due to a reduction in government pharmacy funding in the U.K.
The Pharmaceutical Wholesale division recorded quarterly sales of $5.03 billion, down 10.6% year over year. At CER, excluding acquisitions and dispositions, comparable store sales rose 5.2%.
Margins
Gross profit decreased 3.8% year over year to $7.56 billion. Reported gross margin contracted 39 basis points (bps) to $25.67 million.
Selling, general and administrative (SG&A) expenses inched up 1.9% to $6.12 billion. Adjusted operating income decreased 22.7% to $1.43 billion owing to significantly lower gross profits. Accordingly, adjusted operating margin contracted 128 bps to 4.8%.
Financial Condition
Walgreens Boots ended the second quarter of 2017 with cash and cash equivalents of $11.82 billion, compared with $9.56 billion at the end of first-quarter fiscal 2017. Long-term debt was $17.75 billion at the end of the reported quarter, compared with $12.97 billion at the end of the second quarter of fiscal 2016.
Moreover, the company generated operating cash flow of $3.38 billion in the second quarter, up from $525 million in the first quarter. The resultant free cash flow was $2.59 billion in the reported quarter as compared with $2.03 billion in the year-ago quarter.
Guidance
Walgreens Boots maintained its guidance for fiscal 2017 and continues to expect adjusted earnings per share in the range of $4.90 to $5.08.The Zacks Consensus Estimate of $5.00 is within the guided range.
As announced on Jan 30, 2017, the company no longer expects any material accretion from Rite Aid in fiscal 2017. Additionally, this guidance assumes current exchange rates for the rest of the fiscal.
Progress on Rite Aid Acquisition
Walgreens Boots is in talks with the Federal Trade Commission (FTC) regarding its pending acquisition of Rite Aid Corporation. The company is working toward closing the buyout by the end of this July. As announced on Jan 30 2017, Walgreens Boots Alliance and Rite Aid Corporation had entered into an amendment and extension of merger agreement, valued at 17.2 billion including acquired net debt, on Oct 27, 2015.
Our Take
Walgreens Boots reported a dull second-quarter fiscal 2017, with earnings meeting the Zacks Consensus Estimate and sales missing the same. Declining sales at the Retail Pharmacy International and Pharmaceutical Wholesale divisions added to the disappointment. However, pharmacy volume and market share in the Retail Pharmacy USA division saw the highest comparable prescription growth in more than seven years.
Zacks Rank & Key Picks
Walgreens Boots currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader Medical space include Inogen, Inc. (INGN - Free Report) , Orasure Technologies, Inc. (OSUR - Free Report) and ZELTIQ Aesthetics, Inc. . While Inogen sports a Zacks Rank #1 (Strong Buy), Orasure and ZELTIQ Aesthetics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen gained 64.4% in the last one year compared with the S&P 500’s gain of 14.2%. The company reported a stellar four-quarter positive average earnings surprise of over 49.08%.
Orasure surged 75.2% in the last one year compared with the S&P 500’s gain. Its four-quarter average earnings surprise was a positive 123.5%.
ZELTIQ Aesthetics gained over 89.2% in the past one year, better than the S&P 500 mark. It posted a trailing four-quarter positive average earnings surprise of 12.03%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Walgreens Boots (WBA) Meets Q2 Earnings, Retains EPS View
Walgreens Boots Alliance, Inc. (WBA - Free Report) reported adjusted earnings per share (EPS) of $1.36 in second-quarter fiscal 2017, up 6.1% year over year. Adjusted EPS was in line with the Zacks Consensus Estimate.
On a reported basis, net earnings came in at $1.06 billion, reflecting an increase of 13.9% from the prior-year quarter. Reported earnings came in at 98 cents, reflecting an improvement of 15.3% on a year-over-year basis.
Total Sales
Walgreens Boots recorded total sales of $29.44 billion in the fiscal second quarter, down 2.4% year over year and up 0.9% at constant exchange rate (CER). The top line missed the Zacks Consensus Estimate of $30.56 billion.
Following the earnings release, the company’s share price dropped 0.90% during pre-market trading session.
Walgreens Boots Alliance, Inc. Price, Consensus and EPS Surprise
Walgreens Boots Alliance, Inc. Price, Consensus and EPS Surprise | Walgreens Boots Alliance, Inc. Quote
Segments in Detail
Walgreens Boots currently reports under three operating segments: Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale.
The Retail Pharmacy USA division delivered sales of $21.81 billion in the reported quarter, reflecting an increase of 1.5% on a year-over-year basis. Within this segment, total sales at comparable drugstores rose 2.4%, while prescriptions filled in comparable stores grew 7.9% on account of Medicare Part D growth and volume growth from previously announced strategic pharmacy collaborations. On the other hand, comparable retail stores edged down 0.8% due to lower sales of consumables and general merchandise category and at the personal care category, partially offset by higher sales in the health and wellness and beauty categories.
Pharmacy sales, which accounted for 66.5% of the division’s sales in the quarter, increased 3.7% from the year-ago period, while pharmacy sales at comparable stores increased 4.2% on higher volumes.
Revenues at the Retail Pharmacy International division declined 14.5% on a year-over-year basis (down 1.9% at CER) to $3.10 billion, on account of currency fluctuations. At CER, comparable store sales in the second quarter increased 0.6% year over year, while comparable pharmacy sales fell 3.7% due to a reduction in government pharmacy funding in the U.K.
The Pharmaceutical Wholesale division recorded quarterly sales of $5.03 billion, down 10.6% year over year. At CER, excluding acquisitions and dispositions, comparable store sales rose 5.2%.
Margins
Gross profit decreased 3.8% year over year to $7.56 billion. Reported gross margin contracted 39 basis points (bps) to $25.67 million.
Selling, general and administrative (SG&A) expenses inched up 1.9% to $6.12 billion. Adjusted operating income decreased 22.7% to $1.43 billion owing to significantly lower gross profits. Accordingly, adjusted operating margin contracted 128 bps to 4.8%.
Financial Condition
Walgreens Boots ended the second quarter of 2017 with cash and cash equivalents of $11.82 billion, compared with $9.56 billion at the end of first-quarter fiscal 2017. Long-term debt was $17.75 billion at the end of the reported quarter, compared with $12.97 billion at the end of the second quarter of fiscal 2016.
Moreover, the company generated operating cash flow of $3.38 billion in the second quarter, up from $525 million in the first quarter. The resultant free cash flow was $2.59 billion in the reported quarter as compared with $2.03 billion in the year-ago quarter.
Guidance
Walgreens Boots maintained its guidance for fiscal 2017 and continues to expect adjusted earnings per share in the range of $4.90 to $5.08.The Zacks Consensus Estimate of $5.00 is within the guided range.
As announced on Jan 30, 2017, the company no longer expects any material accretion from Rite Aid in fiscal 2017. Additionally, this guidance assumes current exchange rates for the rest of the fiscal.
Progress on Rite Aid Acquisition
Walgreens Boots is in talks with the Federal Trade Commission (FTC) regarding its pending acquisition of Rite Aid Corporation. The company is working toward closing the buyout by the end of this July. As announced on Jan 30 2017, Walgreens Boots Alliance and Rite Aid Corporation had entered into an amendment and extension of merger agreement, valued at 17.2 billion including acquired net debt, on Oct 27, 2015.
Our Take
Walgreens Boots reported a dull second-quarter fiscal 2017, with earnings meeting the Zacks Consensus Estimate and sales missing the same. Declining sales at the Retail Pharmacy International and Pharmaceutical Wholesale divisions added to the disappointment. However, pharmacy volume and market share in the Retail Pharmacy USA division saw the highest comparable prescription growth in more than seven years.
Zacks Rank & Key Picks
Walgreens Boots currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader Medical space include Inogen, Inc. (INGN - Free Report) , Orasure Technologies, Inc. (OSUR - Free Report) and ZELTIQ Aesthetics, Inc. . While Inogen sports a Zacks Rank #1 (Strong Buy), Orasure and ZELTIQ Aesthetics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen gained 64.4% in the last one year compared with the S&P 500’s gain of 14.2%. The company reported a stellar four-quarter positive average earnings surprise of over 49.08%.
Orasure surged 75.2% in the last one year compared with the S&P 500’s gain. Its four-quarter average earnings surprise was a positive 123.5%.
ZELTIQ Aesthetics gained over 89.2% in the past one year, better than the S&P 500 mark. It posted a trailing four-quarter positive average earnings surprise of 12.03%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>