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CVS Health (CVS) Gains But Lags Market: What You Should Know

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CVS Health (CVS - Free Report) closed at $75.04 in the latest trading session, marking a +0.7% move from the prior day. This change lagged the S&P 500's 1.44% gain on the day.

Coming into today, shares of the drugstore chain and pharmacy benefits manager had gained 5.2% in the past month. In that same time, the Retail-Wholesale sector gained 2.35%, while the S&P 500 gained 6.26%.

Investors will be hoping for strength from CVS as it approaches its next earnings release. In that report, analysts expect CVS to post earnings of $1.69 per share. This would mark a year-over-year decline of 11.52%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $68.44 billion, up 2.53% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.52 per share and revenue of $280.97 billion, which would represent changes of +0.27% and +4.56%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for CVS. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. The Zacks Consensus EPS estimate has moved 0.47% higher within the past month. CVS currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, CVS is holding a Forward P/E ratio of 9.88. Its industry sports an average Forward P/E of 10.55, so we one might conclude that CVS is trading at a discount comparatively.

Meanwhile, CVS's PEG ratio is currently 1.47. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Pharmacies and Drug Stores industry currently had an average PEG ratio of 1.55 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 195, which puts it in the bottom 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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