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CVS Health (CVS) Dips More Than Broader Markets: What You Should Know

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CVS Health (CVS - Free Report) closed the most recent trading day at $63.35, moving -1.48% from the previous trading session. This change lagged the S&P 500's daily loss of 0.01%. At the same time, the Dow added 0.06%, and the tech-heavy Nasdaq lost 0.06%.

Coming into today, shares of the drugstore chain and pharmacy benefits manager had gained 3.63% in the past month. In that same time, the Retail-Wholesale sector gained 2.78%, while the S&P 500 gained 3.23%.

Investors will be hoping for strength from CVS as it approaches its next earnings release. The company is expected to report EPS of $1.77, up 2.31% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $63.04 billion, up 33.37% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.96 per share and revenue of $252.42 billion. These totals would mark changes of -1.69% and +30.05%, respectively, from last year.

Any recent changes to analyst estimates for CVS should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.01% higher. CVS currently has a Zacks Rank of #2 (Buy).

Digging into valuation, CVS currently has a Forward P/E ratio of 9.23. For comparison, its industry has an average Forward P/E of 9.21, which means CVS is trading at a premium to the group.

Investors should also note that CVS has a PEG ratio of 1.4 right now. 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. CVS's industry had an average PEG ratio of 1.38 as of yesterday's close.

The Retail - Pharmacies and Drug Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 106, putting it in the top 42% 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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