Today, shares of Walgreens Boots Alliance (WBA, Financial) saw a notable movement with an increase in price by 2.86%, bringing the current stock price to $12.24. This rise is indicative of a fluctuating market response amid ongoing company developments.
Once a stalwart in the Dow Jones Industrial Average, Walgreens Boots Alliance (WBA, Financial) faced a tumultuous year in 2024 due to dwindling vaccine demand, decreased consumer spending, and failed acquisitions. This led to the stock's removal from the index, a drastic dividend cut, and a consequential stock decline of 64% through the year.
January marked the beginning of the downturn as Walgreens announced a dividend cut of 48% to $0.25 per quarter during its first-quarter earnings report. This move was part of an effort to manage costs and maintain cash flow, with an initial adjusted earnings per share (EPS) guidance of $3.20-$3.50.
In March, the company reported a significant $5.8 billion impairment charge related to VillageMD, a venture that failed to deliver the expected growth. This acquisition, which cost $5.2 billion in 2021 to secure a 63% stake, led Walgreens to lower its EPS guidance to $3.20-$3.35.
However, the most severe hit occurred on June 27th, when WBA's shares plummeted by 22% following a reduction in full-year EPS guidance to $2.80-$2.95, attributed to ongoing challenges in the pharmacy sector and suppressed consumer spending.
Despite last year's struggles, Walgreens is showing signs of stabilization. Early 2025 reports indicate a growing revenue and a prediction for an adjusted EPS range of $1.40 to $1.80. The company's current dividend yield is at 10.9%, which might be appealing to dividend investors assuming the recovery trajectory maintains its course.
Analyzing the stock through financial metrics, Walgreens Boots Alliance (WBA, Financial) has a Market Capitalization of approximately $10.58 billion and an Enterprise Value of $41.54 billion. The company exhibits a Price-to-Book ratio of 1.06, although its Altman Z-Score is in the 'distress zone' at 1.68, indicating potential financial vulnerability.
In terms of valuation, the stock's GF Value stands at $32.95, suggesting it may be undervalued with potential upside if financial health issues are addressed. Investors looking at GF Value might consider this potential while weighing in on the company's strategic adjustments and market conditions.
With an improved business outlook, Walgreens Boots Alliance (WBA, Financial) could harness its expansive retail network and strategic healthcare partnerships to solidify its position as a leading pharmacy-led health and wellbeing company.
