Walgreen Earns 78 Cents Per Share

Last Friday, I tweeted:

$WAG is looking like a good value. Earnings are next week. Anyone else think it can be a $40 stock? $$

This morning, Walgreen ($WAG) reported quarterly earnings of 78 cents per share which was one penny better than estimates:

For the quarter ended Feb. 29, Walgreen reported a profit of $683 million, or 78 cents a share, down from $739 million, or 80 cents a share, a year earlier. The latest period included inventory provisions of $72 million compared with $56 million a year earlier. Analysts polled by Thomson Reuters most recently projected earnings of 77 cents.

Gross margin edged up to 28.9% from 28.8%. Overhead costs were up 4.1%.

Earlier this month, Walgreen reported that total sales edged up 0.8% to $18.7 billion.

The stock has been as high as $35.49 this morning, which is more than 5% higher since the time of my tweet.

Walgreen’s business isn’t in the best shape, but I think the shares are a good value here. The company was hurt last quarter by exiting Express Script’s network. Walgreen said the impact of the exit was seven cents per share. They were also hurt by a mild flu season (bad news for us is good news for Walgreen).

I like the numbers here. Wall Street currently expects Walgreen to earn $2.62 per share for the fiscal year (ending this August), and $2.91 for the fiscal year after that. Even if the company posts mediocre results, I think it can hit $40 by the end of this year.

Posted by on March 27th, 2012 at 9:58 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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