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What's in Store for Walgreens Boots (WBA) in Q1 Earnings?
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Walgreens Boots Alliance, Inc (WBA - Free Report) is slated to release first-quarter 2017 results, before the market opens on Jan 5.
Last quarter, the company posted a positive earnings surprise of 8.08%. In fact, in the last four quarters, Walgreens Boots’ earnings outpaced the Zacks Consensus Estimate at an average of 5.23%. Let’s see how things are shaping up prior to this announcement.
Factors at Play
In the recently concluded fourth quarter, Walgreens Boots posted a 21.6% rise in the bottom line on solid top-line performance primarily buoyed by a solid Retail Pharmacy USA segment show. The company expects to maintain the trend in the yet-to-be-reported quarter based on several strategic pharmacy partnerships in the U.S. These collaborations include a 90-day prescription agreement with OptumRx and EnvisionRx, deal with Express Scripts and innovative partnership with Prime Therapeutics.
Walgreens Boots has issued its fiscal 2017 guidance. The company currently expects adjusted EPS in the $4.85–$5.20 range for the first quarter of 2017.
Meanwhile, the company continues to focus on strategic programs such as skin product launch and vaccination program which are expected to reap benefits in the forthcoming quarter. Reportedly, Walgreens Boots has carried out the first phase of its new beauty offering which has reached more than 1,600 stores across the U.S. by the end of the fiscal 2016.
Notably, the company has adopted several initiatives to improve its core performance and boost shareholders’ value. Management has outlined a new three-year plan through fiscal 2017. The company has also managed to achieve $1 billion of combined synergy by the end of fiscal 2016 and continues to aim to attain another $1.5 billion by fiscal 2017-end. The plan also includes a multi-faceted cost-reduction initiative.
On the flip side, the company’s gross margin continued to be weak owing to rising reimbursement pressure and generic drug cost inflation. A competitive landscape and macroeconomic instability continue to remain major headwinds for the company. Above all, Walgreens Boots expects a shift in the mix of pharmacy prescription volume toward programs offering lower reimbursement rates which might adversely affect its operational results in time ahead.
Before reporting fourth-quarter results, Walgreens Boots announced that it would be closing the impending acquisition of Rite Aid on Jan 27, 2017. Walgreens Boots is presently seekingregulatory approval for the buyout. Recently, Walgreens Boots inked an agreement to sell 865 Rite Aid stores and certain assets related to store operations to Fred’s, Inc. We currently await the integration of Rite Aid into Walgreens’ business model which should expand its footprint in the U.S. in the near term.
Share Price Performance
In the majority of the last six months, Walgreens Boots has outperformed the Zacks classified Retail-Drug Stores industry with respect to price performance. The stock now stands at 5.5%, much better than the 6.8% decline of the industry. The company’s long-term fundamentals are also strong with a 5-year revenue CAGR of 13.1% and earnings per share BNRI of 15.7%.
Earnings Whispers
Our proven model does not conclusively show that Walgreens Boots is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here, as you will see below.
Zacks ESP: Walgreens Boots has an Earnings ESP of -0.92%. That is because the Most Accurate estimate stands at $1.08 while the Zacks Consensus Estimate is pegged at $1.09. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Walgreens Boots’ Zacks Rank #3 increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may consider as our model shows that they have the right combination of elements to post an earnings beat in the upcoming quarter:
Catabasis Pharmaceuticals, Inc. has an Earnings ESP of +5.77% and a Zacks Rank #2.
ConforMIS, Inc. has an Earnings ESP of +3.33% and a Zacks Rank #2.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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What's in Store for Walgreens Boots (WBA) in Q1 Earnings?
Walgreens Boots Alliance, Inc (WBA - Free Report) is slated to release first-quarter 2017 results, before the market opens on Jan 5.
Last quarter, the company posted a positive earnings surprise of 8.08%. In fact, in the last four quarters, Walgreens Boots’ earnings outpaced the Zacks Consensus Estimate at an average of 5.23%. Let’s see how things are shaping up prior to this announcement.
Factors at Play
In the recently concluded fourth quarter, Walgreens Boots posted a 21.6% rise in the bottom line on solid top-line performance primarily buoyed by a solid Retail Pharmacy USA segment show. The company expects to maintain the trend in the yet-to-be-reported quarter based on several strategic pharmacy partnerships in the U.S. These collaborations include a 90-day prescription agreement with OptumRx and EnvisionRx, deal with Express Scripts and innovative partnership with Prime Therapeutics.
Walgreens Boots has issued its fiscal 2017 guidance. The company currently expects adjusted EPS in the $4.85–$5.20 range for the first quarter of 2017.
WALGREENS BAI Price and EPS Surprise
WALGREENS BAI Price and EPS Surprise | WALGREENS BAI Quote
Meanwhile, the company continues to focus on strategic programs such as skin product launch and vaccination program which are expected to reap benefits in the forthcoming quarter. Reportedly, Walgreens Boots has carried out the first phase of its new beauty offering which has reached more than 1,600 stores across the U.S. by the end of the fiscal 2016.
Notably, the company has adopted several initiatives to improve its core performance and boost shareholders’ value. Management has outlined a new three-year plan through fiscal 2017. The company has also managed to achieve $1 billion of combined synergy by the end of fiscal 2016 and continues to aim to attain another $1.5 billion by fiscal 2017-end. The plan also includes a multi-faceted cost-reduction initiative.
On the flip side, the company’s gross margin continued to be weak owing to rising reimbursement pressure and generic drug cost inflation. A competitive landscape and macroeconomic instability continue to remain major headwinds for the company. Above all, Walgreens Boots expects a shift in the mix of pharmacy prescription volume toward programs offering lower reimbursement rates which might adversely affect its operational results in time ahead.
Before reporting fourth-quarter results, Walgreens Boots announced that it would be closing the impending acquisition of Rite Aid on Jan 27, 2017. Walgreens Boots is presently seekingregulatory approval for the buyout. Recently, Walgreens Boots inked an agreement to sell 865 Rite Aid stores and certain assets related to store operations to Fred’s, Inc. We currently await the integration of Rite Aid into Walgreens’ business model which should expand its footprint in the U.S. in the near term.
Share Price Performance
In the majority of the last six months, Walgreens Boots has outperformed the Zacks classified Retail-Drug Stores industry with respect to price performance. The stock now stands at 5.5%, much better than the 6.8% decline of the industry. The company’s long-term fundamentals are also strong with a 5-year revenue CAGR of 13.1% and earnings per share BNRI of 15.7%.
Earnings Whispers
Our proven model does not conclusively show that Walgreens Boots is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. However, that is not the case here, as you will see below.
Zacks ESP: Walgreens Boots has an Earnings ESP of -0.92%. That is because the Most Accurate estimate stands at $1.08 while the Zacks Consensus Estimate is pegged at $1.09. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Walgreens Boots’ Zacks Rank #3 increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may consider as our model shows that they have the right combination of elements to post an earnings beat in the upcoming quarter:
Align Technology, Inc. (ALGN - Free Report) has an Earnings ESP of +4.48% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Catabasis Pharmaceuticals, Inc. has an Earnings ESP of +5.77% and a Zacks Rank #2.
ConforMIS, Inc. has an Earnings ESP of +3.33% and a Zacks Rank #2.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>