Shares of Walgreens Boots Alliance (WBA, Financial) surged 13.22% following its announcement of fiscal 2024 fourth-quarter results. The company reported impressive sales growth outpacing analyst forecasts, which was a key driver for the stock movement.
Walgreens Boots Alliance (WBA, Financial) reported significant sales of $37.5 billion for the quarter ending August 31, which marks a 6% increase year over year. This surpassed the analyst expectations of $35.75 billion. However, despite the impressive sales figures, the company reported a GAAP net loss per share of $3.48. Adjusted earnings per share stood at $0.39, a 40.8% decrease from last year, but it still managed to exceed the consensus estimate of $0.36.
The company, facing profitability challenges, also announced strategic plans to close approximately 1,200 unprofitable stores over the next three years, with 500 closures planned for fiscal 2025. This decision is expected to bolster adjusted earnings and free cash flow, contributing to investor optimism.
In terms of valuation, WBA currently trades at $10.19 with a market capitalization of approximately $8.8 billion. The stock exhibits a PB ratio of 0.64 and PS ratio near a historic 10-year low, indicating potential undervaluation. However, potential investors should be cautious as the GF Value indicates the stock might be a "Possible Value Trap." For more details on its GF Value, visit GuruFocus.
Despite the recent positive movement, WBA faces several warning signs. The Altman Z-Score indicates financial distress, suggesting possible bankruptcy within the next two years. Additionally, gross margin has been in long-term decline, and asset growth has outpaced revenue growth, pointing to efficiency concerns. Nevertheless, the stock's low valuation metrics and improvements in cash flow positions could potentially provide a turnaround story for WBA.
