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CVS Health (CVS) Outpaces Stock Market Gains: What You Should Know

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CVS Health (CVS - Free Report) closed at $68.30 in the latest trading session, marking a +0.81% move from the prior day. This change outpaced the S&P 500's 0.64% gain on the day. Meanwhile, the Dow gained 0.65%, and the Nasdaq, a tech-heavy index, added 0.14%.

Coming into today, shares of the drugstore chain and pharmacy benefits manager had lost 2.7% in the past month. In that same time, the Retail-Wholesale sector gained 1.3%, while the S&P 500 gained 3.19%.

CVS will be looking to display strength as it nears its next earnings release. On that day, CVS is projected to report earnings of $1.25 per share, which would represent a year-over-year decline of 27.75%. Meanwhile, our latest consensus estimate is calling for revenue of $68.54 billion, up 2.47% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.42 per share and revenue of $267.85 billion, which would represent changes of +4.8% and +4.31%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for CVS. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. CVS is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that CVS has a Forward P/E ratio of 9.13 right now. This valuation marks a discount compared to its industry's average Forward P/E of 10.96.

It is also worth noting that CVS currently has a PEG ratio of 1.55. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Pharmacies and Drug Stores industry currently had an average PEG ratio of 1.6 as of yesterday's close.

The Retail - Pharmacies and Drug Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 129, which puts it in the top 50% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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