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Walgreens Boots Alliance (NASDAQ:), a global healthcare and retail corporation, is grappling with market challenges following successive earnings misses in recent quarters. The company’s shares, however, remain undervalued, igniting discussions among investors about its potential as a value play or a trap.
The multinational corporation, which operates divisions such as U.S. Retail Pharmacy, International, and U.S. Healthcare, missed its earnings by one cent last quarter and six cents in the prior one. This downward trend led to WBA being ranked a Zacks Rank #5 (Strong Sell).
Nine analysts have subsequently lowered their full-year estimates for WBA from $3.97 to $3.53, and next year’s forecasts from $4.47 to $3.89, leading to an 11.3% contraction in this year’s earnings. The company’s full-year sales growth has also slowed to 2.5%.
Notably, according to InvestingPro data, WBA has a market capitalization of 19.68B USD and an adjusted P/E ratio of 11.38 as of Q4 2023. The company’s revenue growth for the same period was reported at 4.81%, with a quarterly growth of 9.16%. Moreover, the firm has a gross profit of 27.07B USD and an EBITDA of 4098M USD.
Despite these challenges, WBA’s shares are currently undervalued with a forward PE of 6.6x and price to sales at 0.14x. This discrepancy has prompted debates among investors regarding whether WBA represents a valuable investment opportunity or a potential pitfall.
In this context, it’s worth noting a couple of InvestingPro Tips. One, WBA’s revenue growth has been accelerating, and two, the company has raised its dividend for 47 consecutive years, which can be seen as a positive sign for investors looking for steady income. For more insights like these, check out the InvestingPro product that includes additional tips.
In contrast to its declining performance, industry counterparts CVS Health (NYSE:NYSE:) and Rite Aid (NYSE:NYSE:) are currently outperforming according to Zacks Ranks.
Nevertheless, WBA remains optimistic about its future prospects and anticipates a return to 10% growth next year. The company’s confidence is partly backed by its prominent position in the Consumer Staples Distribution & Retail industry, as per InvestingPro Tips.
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