WBA
Walgreens Boots Alliance Inc
Healthcare, Consumer
04/12/2018
Presented
| Date | 04/05/2018 |
| Price | $64.65 |
| Market Cap | $64.36B |
| Ent Value | $83.33B |
| P/E Ratio | 16.16x |
| Book Value | $27.59 |
| Div Yield | 2.47% |
| Shares O/S | 995.50M |
| Ave Daily Vol | 5,788,714 |
| Short Int | N/A |
Current
| Price | $10.42 |
| Market Cap | $9.00B |
| Walgreens Boots Alliance, Inc. engages in providing drug store services. The company operates through the following segments: Retail Pharmacy USA, Retail Pharmacy International, and Pharmaceutical Wholesale. The Retail Pharmacy USA segment engages in pharmacy-led health and beauty retail businesses, which sells its products under brand names Walgreens and Duane Reade. The Retail Pharmacy International segment offers retail stores, which sells products of brands No7, Boots Pharmaceuticals, Botanics, Liz Earle, and Soap & Glory. The Pharmaceutical Wholesale segment supplies medicines, other healthcare products and related services to pharmacies, doctors, health centers, and hospitals. The company was founded in December 2014 and is headquartered in Deerfield, IL. |
Publicly traded companies mentioned herein: Aetna Inc (AET), Amazon.com Inc (AMZN), AmerisourceBergen Corporation (ABC), Best Buy Co Inc (BBY), Cigna Corporation (CI), CVS Health Corporation (CVS), Fastenal Co (FAST), JB Hi-Fi Ltd (JBH AU), Rite Aid (RAD), Walgreens Boots Alliance Inc (WBA), WH Smith PLC (SMWH LN)
Highlights
The presenter is long shares of Walgreens (WBA) at $65 due to an attractive 10% FCF yield and low ~10x multiple on 2018 EPS guidance (excluding its stake in AmerisourceBergen, which represents ~$5/share of value). He thinks highly of CEO Stefano Pessina, who built the WBA that exists today starting with the merger of Alliance UniChem and Boots Group in 2006 and then the combination of Walgreens and Boots in 2014. “He is an amazing buyer of assets that lets people come to him” (he gets good prices and has always created value). Building on $6 of EPS for 2018 (August year-end), the presenter forecasts $8 of EPS by August 2020. Even holding the multiple constant suggests the stock is meaningfully undervalued today, and for a variety of reasons, including excessive concern about Amazon, a lack of appreciation for how well Pessina is running the company, and the number of options WBA has relative to its peers, he doesn’t believe shares should trade at a trough/”crisis” multiple (at its peak, Walgreens shares traded at 20x earnings).
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