{"id":10868,"date":"2023-05-19T08:27:01","date_gmt":"2023-05-19T12:27:01","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/is-walgreens-stock-undervalued-at-32\/"},"modified":"2023-05-19T08:27:02","modified_gmt":"2023-05-19T12:27:02","slug":"is-walgreens-stock-undervalued-at-32","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=10868","title":{"rendered":"Is Walgreens Stock Undervalued At $32?"},"content":{"rendered":"
\n

After a 14% fall in Walgreens stock<\/strong> (NYSE: WBA) this year, underperforming the broader S&P500 index, which is up 8%, we believe it is undervalued. Looking at a slightly longer term, WBA stock is down 46% from levels seen in late 2019. This can be attributed to 1. <\/strong>the company\u2019s P\/S ratio falling a significant 48% to 0.3x trailing revenues, partly offset by 2. <\/strong>Walgreens\u2019 revenue<\/strong> <\/strong>growth of 5% to $110 billion over the last twelve months, and 3.<\/strong> a 0.4% fall in its average total shares outstanding to 863 million. <\/strong>Our dashboard on Why Walgreens Stock Moved<\/strong> has more details.<\/p>\n

Walgreens
\n WBA
\n <\/fbs-ticker>\u2019 revenue growth over the recent years was driven by increased demand for Covid-19 testing and vaccine administration. The sales peaked at $112 billion in fiscal 2021 before falling slightly to $110 billion now due to a decline in Covid-19-related demand. The company is expected to see a rise in footfall at stores, prescription volume, and average revenue per prescription to trend higher, aiding its sales growth. For the six months period ending February, Walgreens saw a 2.3% fall in prescription volume, but this includes the Covid-19 vaccination prescriptions. The company plans to offer primary care at its stores, which will likely fuel its top-line growth. On those lines, it acquired a majority stake in VillageMD to provide primary care at hundreds of locations in the next two years.<\/p>\n

Although the company has been able to grow its sales, its operating margin has contracted to 2.0% in 2022, vs. 5.8% in 2019, due to rising costs, and this has weighed on its stock price growth in the recent past. The operating margin plunged to -6.0% for the last twelve months due to a $7 billion charge to resolve most of its opioid-related lawsuits. Our Walgreens Operating Income Comparison<\/strong> dashboard has more details. Now, with the VillageMD acquisition, the company is looking forward to $1 billion in cost synergies in the next two years, and it will likely see a rebound in operating margins in the coming years.<\/p>\n

<\/fbs-ad><\/p>\n

Looking at its stock price, we estimate Walgreens\u2019 valuation<\/strong> to be $39 per share, reflecting a 23% upside from its current level of $32. WBA stock is trading at 7x forward expected earnings of $4.55 on a per-share and adjusted basis for fiscal 2023, compared to the last three-year average of 9x, implying it is undervalued. Even if we look at valuation from a P\/S perspective, WBA looks undervalued. It is currently trading at 0.25x trailing revenues, compared to its last three-year average of 0.33x. Our Walgreens Valuation Ratios Comparison<\/strong> dashboard offers more details.<\/p>\n

While WBA stock may see higher levels, the Covid-19 crisis has created many pricing discontinuities, which can offer attractive trading opportunities. For example, you\u2019ll be surprised by how counter-intuitive the stock valuation is for Walmart vs. VMWare.<\/p>\n

What if you\u2019re looking for a more balanced portfolio instead? Our high-quality portfolio<\/strong> and multi-strategy portfolio<\/strong> have beaten the market consistently since the end of 2016.<\/p>\n

Invest with Trefis <\/strong>Market Beating Portfolios<\/strong><\/p>\n

See all Trefis <\/strong>Price Estimates<\/strong><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

After a 14% fall in Walgreens stock (NYSE: WBA) this year, underperforming the broader S&P500 index, which is up 8%, we believe it is undervalued. Looking at a slightly longer term, WBA stock is down 46% from levels seen in late 2019. This can be attributed to 1. the company\u2019s P\/S ratio falling a significant […]<\/p>\n","protected":false},"author":1,"featured_media":10869,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-10868","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\nIs Walgreens Stock Undervalued At $32? | iFintechWorld<\/title>\n<meta name=\"description\" content=\"After a 14% fall in Walgreens stock (NYSE: WBA) this year, underperforming the broader S&P500 index, which is up 8%, we believe it is undervalued.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=10868\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is Walgreens Stock Undervalued At $32? 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