Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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Highlights from the ratings report include:
- Net operating cash flow has significantly increased by 50.16% to $1,847.00 million when compared to the same quarter last year. In addition, WALGREEN CO has also vastly surpassed the industry average cash flow growth rate of -9.59%.
- WAG's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that WAG's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Food & Staples Retailing industry and the overall market on the basis of return on equity, WALGREEN CO has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- WALGREEN CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WALGREEN CO increased its bottom line by earning $2.94 versus $2.13 in the prior year. For the next year, the market is expecting a contraction of 11.6% in earnings ($2.60 versus $2.94).
Walgreen Co., together with its subsidiaries, operates a chain of drugstores in the United States. The company has a P/E ratio of 12.3, below the average retail industry P/E ratio of 12.5 and below the S&P 500 P/E ratio of 17.7. Walgreen has a market cap of $31.11 billion and is part of the
industry. Shares are up 7.5% year to date as of the close of trading on Thursday.
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--Written by a member of TheStreet Ratings Staff.