NEW YORK (TheStreet) -- Walgreen (WAG) shares are up 0.45% to $76.42 in pre-market trading on Wednesday after the retail drugstore chain completed its merger with European-based Alliance Boots today. The combined company's stock will trade under the 'WBA' ticker symbol on the New York Stock Exchange.
Walgreen, the nation's largest drugstore chain, said that the company will now be called Walgreen Boots Alliance and that its Walgreen division will operate as a subsidiary.
Walgreen originally purchased a 45% stake in Alliance Boots, the U.K.'s largest drugstore chain, in 2012 for $6.7 billion before purchasing the remaining stake for $16 billion earlier this year. The combined company will operate about 12,800 stores worldwide following the merger.
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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, increase in net income, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WAG's revenue growth has slightly outpaced the industry average of 1.2%. Since the same quarter one year prior, revenues slightly increased by 6.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Food & Staples Retailing industry average. The net income increased by 16.4% when compared to the same quarter one year prior, going from $695.00 million to $809.00 million.
- Net operating cash flow has significantly increased by 675.18% to $1,031.00 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 53.70%.
- WAG's debt-to-equity ratio of 0.70 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that WAG's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.66 is high and demonstrates strong liquidity.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.08% over the past year, a rise that has exceeded that of the S&P 500 Index. 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.
- You can view the full analysis from the report here: WAG Ratings Report