How Walgreens (WAG) Performed in March

NEW YORK (TheStreet) -- Walgreens (WAG) saw total sales over March increase as pharmacy sales jumped, though the results were offset by weakness in front-end sales.

By midmorning, shares had added 0.63% to $66.77.

The Deerfield, Ill.-based business reported March sales 4.5% higher to $6.43 billion.

Comparable store front-end sales (that is, sales excluding prescription drugs) decreased 3.4%, dragged on by a shift in timing of Easter to April 20 from March 31 a year earlier.

Comparable-store pharmacy sales climbed 8%, negatively impacted by 1.6 percentage points due to generic introductions. Pharmacy sales comprised 64.7% of total sales over the month.

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TheStreet Ratings team rates WALGREEN CO as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate WALGREEN CO (WAG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, reasonable valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.6%. Since the same quarter one year prior, revenues slightly increased by 5.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WALGREEN CO increased its bottom line by earning $2.56 versus $2.42 in the prior year. This year, the market expects an improvement in earnings ($3.45 versus $2.56).
  • WAG's debt-to-equity ratio is very low at 0.24 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 0.54, displays a potential problem in covering short-term cash needs.
  • Compared to its closing price of one year ago, WAG's share price has jumped by 36.21%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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