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Walgreens Boots Alliance Inc. (WBA)
:WBA
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Walgreens Boots Alliance
(NASDAQ:WBA)46Neutral
Positive Factors
Financial Strategy
Suspending the dividend frees up close to another $1 billion of annual cash availability, which is seen as the right move for WBA’s ability to reboot the business.
Strategic Initiatives
The reported potential three-way split of Walgreens into a US Pharmacy business, Boots UK, and Shields post-LBO marks another twist in the potential go-private story for WBA.
Negative Factors
Cash Flow Concerns
Key cash outflows like operating lease obligations, litigation, debt payments, and interest expense are mostly out of the company's control, posing challenges to cash flow management.
Walgreens Boots Alliance (WBA) vs. S&P 500 (SPY)
Market Cap
$9.36B
Dividend Yield9.75%
Average Volume (3M)25.95M
Price to Earnings (P/E)―
Beta (1Y)0.63
Revenue Growth5.62%
EPS Growth-1637.59%
CountryUS
Employees312,000
SectorHealthcare
Sector Strength74
IndustryHealthcare Providers & Services
Share Statistics
EPS (TTM)-10.24
Shares Outstanding864,153,440
10 Day Avg. Volume27,428,653
30 Day Avg. Volume25,951,598
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.06
Price to Cash Flow (P/CF)-15.80
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$11.33Price Target Upside4.52% Upside
Rating ConsensusHold
Number of Analyst Covering11
Walgreens Boots Alliance Business Overview & Revenue Model
Company DescriptionRetail pharmacy leader Walgreens Boots Alliance (NASDAQ:WBA) operates through its namesake brand Walgreens in the U.S. and Boots in the U.K. In addition, it owns retail and business brands including the No7 Beauty Company, Duane Reade, Ahumada in Chile, and Benavides in Mexico. The company also targets equity investments in healthcare, pharmacy, and retail and has a presence in over 25 countries with more than 450,000 employees.
How the Company Makes MoneyWalgreens Boots Alliance generates revenue through its retail and pharmacy operations across its key markets. The Retail Pharmacy USA segment contributes significantly to its earnings, primarily through the sale of prescription medications, over-the-counter drugs, and various health and wellness products. In the Retail Pharmacy International segment, revenue is driven by similar sales at Boots locations in markets like the UK and other European countries. Additionally, WBA benefits from its pharmaceutical wholesale division, which distributes healthcare products to numerous healthcare providers worldwide. Partnerships with healthcare providers and insurance companies also play a crucial role in their revenue model, enhancing their service offerings and market reach.
Walgreens Boots Alliance Financial Statement Overview
Summary
Walgreens Boots Alliance is facing significant financial difficulties. The income statement highlights declining profitability with negative EBIT and EBITDA margins and a negative net profit margin. The balance sheet reveals high leverage with a debt-to-equity ratio of 2.75 and a negative return on equity. Cash flow is concerning, with no free cash flow reported, indicating liquidity issues. Overall, the company is struggling with financial stability and liquidity.Income Statement
Walgreens Boots Alliance has seen a decline in its financial performance, with negative EBIT and EBITDA margins of -9.49% and -8.07% respectively for TTM (Trailing-Twelve-Months). The company also reported a negative net profit margin of -5.87%, highlighting significant losses. Revenue growth is present but modest at 1.86%, indicating limited top-line expansion. Overall, the income statement reflects profitability challenges.35
Negative
Balance Sheet
The balance sheet shows a high debt-to-equity ratio of 2.75, indicating substantial leverage, which could pose financial risks. The return on equity is negative at -79.12%, reflecting the impact of net losses on shareholder returns. The equity ratio stands at 14.21%, suggesting a low proportion of equity in the asset base. The balance sheet indicates financial strain with high liabilities relative to equity.40
Negative
Cash Flow
Cash flow metrics are concerning with no free cash flow reported for TTM, indicating a potential liquidity issue. The operating cash flow to net income ratio is negative, showing cash flow challenges amidst losses. Previous free cash flow growth was negative, highlighting the volatility in cash generation. Overall, the cash flow statement signals liquidity and cash management difficulties.20
Very Negative
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 150.41B | 147.66B | 139.08B | 132.70B | 132.51B | 121.98B | Gross Profit |
| 26.53B | 26.52B | 27.07B | 28.27B | 28.07B | 26.08B | EBIT |
| -14.27B | -14.08B | -6.88B | 1.39B | 2.34B | 982.00M | EBITDA |
| -11.87B | -11.28B | 3.48B | 4.96B | 5.96B | 2.84B | Net Income Common Stockholders |
| -8.83B | -8.64B | -3.08B | 4.34B | 2.54B | 456.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 3.11B | 3.11B | 739.00M | 2.47B | 1.19B | 516.00M | Total Assets |
| 81.04B | 81.04B | 96.63B | 90.12B | 81.28B | 87.17B | Total Debt |
| 32.85B | 32.85B | 33.53B | 35.48B | 33.39B | 40.14B | Net Debt |
| 31.53B | 31.53B | 32.81B | 34.12B | 32.20B | 39.62B | Total Liabilities |
| 68.86B | 68.86B | 68.14B | 59.72B | 57.46B | 66.04B | Stockholders Equity |
| 10.45B | 10.45B | 20.02B | 29.37B | 23.82B | 21.14B |
| Cash Flow | Free Cash Flow | ||||
| 0.00 | -363.00M | 141.00M | 2.17B | 4.18B | 4.11B | Operating Cash Flow |
| 1.16B | 1.02B | 2.26B | 3.90B | 5.55B | 5.48B | Investing Cash Flow |
| 1.72B | 1.88B | -3.09B | -1.06B | 4.07B | -1.30B | Financing Cash Flow |
| -2.41B | -538.00M | -887.00M | -1.50B | -9.04B | -4.65B |
Walgreens Boots Alliance Technical Analysis
Positive
10.84
Price Trends
10.49
Positive
9.82
Positive
10.60
Positive
Market Momentum
0.09
Negative
52.49
Neutral
36.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WBA, the sentiment is Positive. The current price of 10.84 is above the 20-day moving average (MA) of 10.36, above the 50-day MA of 10.49, and above the 200-day MA of 10.60, indicating a bullish trend. The MACD of 0.09 indicates Negative momentum. The RSI at 52.49 is Neutral, neither overbought nor oversold. The STOCH value of 36.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WBA.
Walgreens Boots Alliance Risk Analysis
Walgreens Boots Alliance disclosed 46 risk factors in its most recent earnings report. Walgreens Boots Alliance reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Walgreens Boots Alliance Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $2.16T | 36.91 | 20.72% | ― | 10.99% | 91.61% | |
78 Outperform | $460.27B | 60.89 | 30.98% | 0.44% | 5.35% | 16.22% | |
77 Outperform | $762.93B | 39.41 | 22.33% | 0.85% | 5.07% | 25.86% | |
76 Outperform | $82.86B | 17.98 | 6.11% | 4.10% | 4.02% | -43.51% | |
68 Neutral | $16.31B | 12.22 | 18.19% | 3.28% | 2.90% | -30.27% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% | |
46 Neutral | $9.36B | ― | -60.05% | 9.75% | 5.62% | -1637.59% |
* Healthcare Sector Average
Performance Comparison
WBA
Walgreens Boots Alliance
10.84
-8.80
-44.81%
AMZN
Amazon
203.80
29.68
17.05%
COST
Costco
1,036.87
281.06
37.19%
CVS
CVS Health
64.21
-6.29
-8.92%
DG
Dollar General
72.92
-78.40
-51.81%
WMT
Walmart
94.97
35.64
60.07%
Walgreens Boots Alliance Earnings Call Summary
Earnings Call Date: Jan 10, 2025 | % Change Since: 17.57% | Next Earnings Date: Mar 27, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong sales growth across all segments, improved free cash flow, and positive performance in the pharmacy and healthcare segments. However, it also noted challenges with declining retail sales in the U.S. and a significant decline in adjusted EPS. Despite these challenges, the company remains focused on executing its turnaround strategy.Highlights
Sales Growth Across All Segments
Sales increased 6.9% on a constant currency basis with growth across all segments.
Improved Free Cash Flow
Free cash flow improved due to decreased capital expenditures and higher adjusted operating income.
U.S. Pharmacy Services Performance
U.S. Pharmacy Services performed better than expectations with higher margin for COVID-19 vaccines.
International Business Growth
Total sales in the International segment grew 6.5% with Germany wholesale increasing 11.3% and Boots UK up 4.5%.
Healthcare Segment Growth
U.S. Healthcare sales of $2.2 billion increased 12%, with strong performance from VillageMD and Shields.
Lowlights
Decline in U.S. Retail Sales
Comparable retail sales in the U.S. declined 4.6% in the quarter due to a softer cough, cold, and flu season and challenging consumer discretionary spending.
Adjusted EPS Decline
Adjusted EPS declined 23% year-over-year on a constant currency basis due to prior year sale-leaseback gains and lower Cencora equity income.
Ongoing Retail Challenges
Persistent deterioration in consumer discretionary spending and promotional environment continue to impact the retail business.
Company Guidance
During the Walgreens Boots Alliance earnings call for Q1 2025, the management provided detailed guidance on several key metrics. Sales increased by 6.9% on a constant currency basis, with growth across all segments. The adjusted earnings per share (EPS) was reported at $0.51, reflecting a 23% decline year-over-year, primarily due to prior year sale-leaseback gains and lower Cencora equity income. Despite these challenges, the U.S. Retail Pharmacy segment saw a notable comparable sales growth of 8.5%, driven by pharmacy performance, although retail sales declined. In the U.S. Healthcare segment, sales rose by 12%, with VillageMD and Shields showing strong performance. The company achieved significant progress in its Footprint Optimization Program, closing about 70 stores in the quarter and planning for nearly 450 more by the end of 2025. For the fiscal year, Walgreens Boots Alliance reaffirmed its adjusted EPS guidance of $1.40 to $1.80, while also expecting retail comp sales to decline approximately 4% to 5%. The company emphasized its focus on stabilizing and turning around its business by improving drug procurement, optimizing store operations, and advancing its pharmacy services, with a strong emphasis on cost management and cash flow improvement.Walgreens Boots Alliance Corporate Events
Business Operations and StrategyFinancial Disclosures
Walgreens Boots Alliance Reports Q1 2025 Financial Results
Neutral
Jan 10, 2025
Walgreens Boots Alliance announced its fiscal 2025 first quarter results, highlighting a 7.5% increase in sales to $39.5 billion, despite a decrease in adjusted earnings per share from $0.66 to $0.51. The company maintains its full-year adjusted EPS guidance, with challenges in U.S. retail sales and higher tax rates balanced by growth in U.S. Healthcare and international segments. The company is focused on strategic priorities, including stabilizing retail pharmacy and enhancing cost efficiencies, although it reported a net loss of $265 million due to increased operating costs and lower retail sales.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.