Investors Wag a Finger at Walgreen

Investors wanted more out of Walgreen (WAG Quote).

Shares in the nation's largest drugstore chain were selling off Wednesday after the company reported slightly disappointing August sales figures. The sales report doesn't alter the company's earnings outlook, say analysts, but the selloff underscores worries over the company's valuation that have dogged Walgreen this year. Investors have demanded the company, which trades at over 30 times this year's estimated earnings, keep raising the bar to justify that pricey multiple.

Walgreen, based in Deerfield, Ill., reported a 7.9% jump in same-store sales in August, on the low end of analysts' projections. More importantly, the company reported a 0.7% decline in general merchandise sales, or so-called front-end items, which are more profitable than pharmacy sales and closely watched by analysts and investors. ...