Walgreen's (WAG) Stock Down on Disappointing Earnings
Shares of Walgreen Company (WAG) closed down -2.83 or -5.89 percent to $45.22 on Tuesday after the company announced its 2013 third quarter earnings. While adjusted earnings were $0.85 per share, versus $0.72 in the same quarter last year, the number was shy of the analyst consensus, which called for earnings of $0.90 per share according to a Zacks Consensus Estimate. The lower than expected earnings were in part due to a sluggish economy, a higher tax rate and interest expenses in the third quarter, as well as an eleven percent increase in the size of the company's shares outstanding. Daily Chart
Deerfield, Illinois based Walgreen Company, better known as Walgreens is the largest chain of drug retailing stores in the United States. Operating more than 8,300 stores in all fifty states, D.C., Puerto Rico and Guam, the company had more $2.12 billion in net income last year. Adjusted net earnings for Walgreen's fiscal third quarter came to a record $812 million, or 85 cents per share compared to adjusted earnings of $628 million or 72 cents in the same period one year ago, an increase of +29.3 percent. GAAP earnings came to $624 million or 65 cents per share, versus $537 million or 62 cents per share in 2012's third quarter. The adjusted earnings included several onetime charges and expenses the company incurred in a legal settlement with the U.S. DEA. Walgreen third quarter earnings were boosted by the company's acquisition of European health and cosmetics retailer Alliance Boots, which accounted for approximately ten cents of the quarter's earnings overall. Sales increased +3.2 percent to $18.3 billion, nevertheless, first nine month sales declined -0.5 percent to $54.3 billion. Front end comparable store sales for stores open for more than a year rose +0.4 percent, but customer traffic in comparable stores decreased -3.9 percent, while basket size increased +4.4 percent, total sales in comparable stores increased +1.4 percent. Walgreens opened or acquired a total of 39 new stores in Q3, versus 52 in the same quarter a year ago. In a conference call with analysts after the earnings release, Chief Executive Officer Greg Wasson said that, "This quarter we continued to see a strengthening in our pharmacy performance as we maintained strong margins and increased our retail pharmacy market share from 18.4 percent to 19.2 percent year over year", he continued "we have worked hard over the past year to crystallize our strategies and ensure we have the growth drivers in place to support long term value creation for Walgreens and our shareholders. We're now focused on the execution that will propel both day to day performance in the short term and the growth we expect over the next two to three years." Walgreens stock is trading at 20 times earnings and has a dividend yield of 2.3 percent. While analysts were disappointed with the company's record earnings, it could be an opportunity for investors. Other News About WAG Walgreens' CEO Discusses F3Q13 Results - Earnings Call Transcript
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Published on Jun 26, 2013
By Jay Hawk