Is Walgreens Getting Enough Out of Q4 Earnings?

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Walgreens Boots Alliance Inc. (NASDAQ: WBA) reported its fiscal fourth-quarter financial results before the markets opened on Monday. The retailer said that it had $1.43 in earnings per share (EPS) and $34.0 billion in revenue, compared with consensus estimates that called for $1.41 in EPS and $33.89 billion in revenue. The same period of last year reportedly had $1.48 in EPS and $33.44 billion in revenue.

Overall, net sales saw an increase of 1.5% from the year-ago quarter and an increase of 2.6% on a constant currency basis.

The Retail Pharmacy USA segment had fourth-quarter sales of $26.0 billion, an increase of 2.1% year over year. At the same time, Retail Pharmacy International saw sales of $2.7 billion, a decrease of 6.3%.

Pharmaceutical Wholesale had fourth-quarter sales of $5.7 billion, an increase of 3.1%. On a constant currency basis, comparable sales increased 7.9%, led by emerging markets and the United Kingdom.

The company introduced guidance of roughly flat growth in fiscal 2020 adjusted EPS at constant currency rates, with a range of plus or minus 3%. Excluding the impact of lower fiscal 2019 bonus payout, this expected performance represents a year-over-year increase in the mid-single digits. Consensus estimates are calling for $5.96 in EPS and $140.09 billion in revenue for the full year.

Stefano Pessina, executive vice chair and chief executive, commented:

We are pleased to report fiscal 2019 results in line with our previously stated guidance despite a challenging operating environment. We are also making progress on our four strategic priorities, which we remain confident are positioning us to deliver long-term growth. While we still face headwinds, I am encouraged by the improvement in U.S. comparable sales performance in the second half of fiscal 2019 and our progress in managing costs in order to save to invest to grow. We are introducing guidance for fiscal 2020 adjusted earnings per share, which we expect will be roughly consistent with fiscal 2019 at constant currency rates – very much in line with our expectations.

Shares of Walgreens traded down fractionally early Monday, at $55.20 in a 52-week range of $49.03 to $86.31. The consensus price target is $57.14.

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