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CVS Health Corp
CVS : NYSE : Health Care
$103.95 | %
Today's Range: 103.37 - 104.42
Avg. Daily Volume: 4,398,100
05/22/15 - 4:02 PM ET

Financial Analysis


CVS HEALTH CORP's gross profit margin for the first quarter of its fiscal year 2015 has decreased when compared to the same period a year ago. Sales and net income have grown, and although the growth in revenues has outpaced the average competitor within the industry, the net income growth has not. CVS HEALTH CORP has weak liquidity. Currently, the Quick Ratio is 0.60 which shows a lack of ability to cover short-term cash needs. The liquidity decreased from the same period a year ago, despite already having weak liquidity to begin with. This would indicate deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has remained virtually unchanged only decreasing by 3.19% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

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Income Statement Q1 FY15 Q1 FY14
Net Sales ($mil)36332.032689.0
EBITDA ($mil)2622.02515.0
EBIT ($mil)2132.02038.0
Net Income ($mil)1221.01129.0


Balance Sheet Q1 FY15 Q1 FY14
Cash & Equiv. ($mil)1634.02848.0
Total Assets ($mil)73930.072822.0
Total Debt ($mil)12762.013410.0
Equity ($mil)36990.038210.0


Profitability Q1 FY15 Q1 FY14
Gross Profit Margin18.3119.64
EBITDA Margin7.217.69
Operating Margin5.876.23
Sales Turnover1.931.77
Return on Assets6.46.54
Return on Equity12.812.49
Debt Q1 FY15 Q1 FY14
Current Ratio1.31.51
Debt/Capital0.260.26
Interest Expense137.0161.0
Interest Coverage15.5612.66


Share Data Q1 FY15 Q1 FY14
Shares outstanding (mil)1127.01173.0
Div / share0.350.28
EPS1.070.95
Book value / share32.8232.57
Institutional Own % n/a n/a
Avg Daily Volume4403361.04656712.0

Valuation


BUY. CVS HEALTH CORP's P/E ratio indicates a premium compared to an average of 22.59 for the Food & Staples Retailing industry and a premium compared to the S&P 500 average of 20.73. To use another comparison, its price-to-book ratio of 3.11 indicates valuation on par with the S&P 500 average of 2.86 and a significant discount versus the industry average of 5.23. The current price-to-sales ratio is well below the S&P 500 average, but above the industry average. The valuation analysis reveals that, CVS HEALTH CORP seems to be trading at a premium to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
CVS 24.99 Peers 22.59   CVS 14.47 Peers 12.47

Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.

CVS is trading at a premium to its peers.

 

Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

CVS is trading at a premium to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
CVS 17.28 Peers 20.11   CVS 0.82 Peers 1.13

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

CVS is trading at a valuation on par with its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

CVS trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
CVS 3.11 Peers 5.23   CVS 3.81 Peers 18.20

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

CVS is trading at a significant discount to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, CVS is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
CVS 0.80 Peers 0.65   CVS 11.11 Peers 7.29

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

CVS is trading at a premium to its industry on this measurement.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

CVS has a sales growth rate that significantly exceeds its peers.

 

 

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