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Walgreens (WBA) to Report Q4 Earnings: What's in the Cards?

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Walgreens Boots Alliance, Inc. (WBA - Free Report) is slated to release fourth-quarter fiscal 2021 results on Oct 14, before market open.

In the fiscal third quarter, the company delivered an earnings surprise of 24.3%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on three occasions and missed in one, the average surprise being 22.29%.

Let’s take a look at how things have shaped up prior to this announcement.

Factors at Play

In recent months, Walgreens shifted a major part of its business to the digital platform, given the unrelenting continuation of the pandemic. The company’s Find Care platform continues to grow, accelerated by the pandemic and witnessing a significant increase in online visits. During the last-reported third quarter, the company noted that the Boots Health Hub now offers an online marketplace for Boots and third-party providers, with almost 100 healthcare services. These developments are expected to have accelerated the company’s digital platform growth in the fiscal fourth quarter, thus adding to the top line.

In June 2021, Walgreens completed the sale of its Alliance Healthcare businesses to AmerisourceBergen for a total consideration of approximately $6.5 billion. The company noted that the cash proceeds will be utilized to reduce debt and accelerate growth of its core retail pharmacy and healthcare businesses. This major development is likely to have contributed significantly to the company’s fiscal fourth-quarter performance.

Retail Pharmacy USA

In the fiscal fourth quarter, Walgreens is expected to have witnessed growth in retail pharmacy business due to an improved business environment amid post-pandemic recovery. The company engages customers through the mass personalization strategy, which boosted retail sales during the last-reported quarter. Walgreens' advertising group is expanding its offerings and is now working with third-party brand providers across digital and video, helping them better connect with customers. This is expected to have driven customer adoption rate in the to-be-reported quarter.

Walgreens Boots Alliance, Inc. Price and EPS Surprise

In the earlier-reported quarter, the company noted growing strength in health and wellness over the past few months. This favorable trend is likely to have continued through the fiscal fourth quarter, driven by increased health consciousness stemming from the pandemic-led crisis, thus boosting the company’s top line. In its July 2021 update, the company confirmed that more than 500 beauty brands are available in the stores and online, with 34 new brands introduced in 2021. This development is likely to have contributed to Walgreens’ health and beauty businesses in the to-be-reported quarter as well.

The Zacks Consensus Estimate for Retail Pharmacy USA’s revenues is pegged at $29.44 billion, suggesting a rise of 9% from the year-ago quarter’s reported figure.

Retail Pharmacy International

In the earlier-reported quarter, international business witnessed a rebound in sales and profitability due to focused execution across Boots UK, Boots Ireland and Opticians, led by strong growth across all e-commerce businesses. The economy's reopening and faster digital platform adoption are expected to have accelerated international businesses in the to-be reported quarter.

During the company’s July 2021 update, Walgreens noted that Boots Health Hub now offers an online marketplace for Boots and third-party providers with almost 100 healthcare services available. As part of the Health Hub, the company recently launched Boots ONLINE DOCTOR -- a new innovative and market-leading service that connects physicians and patients online. Boots.com is likely to have continued with its stellar performance on increasing digital transactions and the launch of a new platform, thus driving revenues in the to-be-reported quarter.

The Zacks Consensus Estimate for Retail Pharmacy International’s revenues is pegged at $4.08 billion, suggesting a surge of 77.4% from the year-ago quarter’s reported figure.

Pharmaceutical Wholesale

The Pharmaceutical Wholesale division has been performing quite impressively over the past few months. In the last-reported quarter, the segment registered robust growth despite the pandemic-led business challenges, including the results of the company's new joint venture in Germany.  However, slow recovery across international markets is expected to have partially affected growth.

The Zacks Consensus Estimate for Pharmaceutical Wholesale’s revenues is pegged at $5.81 billion, suggesting a fall of 3.3% from the last-reported quarter’s reported figure.

What Our Model Suggests

Our proven model predicts an earnings beat for Walgreens this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Walgreens has an Earnings ESP of +0.99%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks Poised to Beat Earnings Estimates

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

Agiliti, Inc. currently has an Earnings ESP of +35.71% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Maravai LifeSciences Holdings, Inc. (MRVI - Free Report) currently has an Earnings ESP of +16.59% and a Zacks Rank #2.

Quest Diagnostics Incorporated (DGX - Free Report) has an Earnings ESP of +6.12% and a Zacks Rank #2.

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