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1. Company Snapshot

1.a. Company Description

Walgreens Boots Alliance, Inc.operates as a pharmacy-led health and beauty retail company.It operates through two segments, the United States and International.


The United States segment sells prescription drugs and an assortment of retail products, including health, wellness, beauty, personal care, consumable, and general merchandise products through its retail drugstores.It also provides central specialty pharmacy services and mail services.As of August 31, 2021, this segment operated 8,965 retail stores under the Walgreens and Duane Reade brands in the United States; and five specialty pharmacies.


The International segment sells prescription drugs; and health and wellness, beauty, personal care, and other consumer products through its pharmacy-led health and beauty retail stores and optical practices, as well as through boots.com and an integrated mobile application.It also engages in pharmaceutical wholesaling and distribution business in Germany.As of August 31, 2021, this segment operated 4,031 retail stores under the Boots, Benavides, and Ahumada in the United Kingdom, Thailand, Norway, the Republic of Ireland, the Netherlands, Mexico, and Chile; and 548 optical practices, including 160 on a franchise basis.


Walgreens Boots Alliance, Inc.was founded in 1901 and is based in Deerfield, Illinois.

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1.b. Last Insights on WBA

The recent performance of Walgreens Boots Alliance was driven by strong pharmacy sales growth, international expansion, and cost controls. The company's Q3 earnings beat estimates, with sales increasing 7.2% year-over-year to $38.99 billion, surpassing expectations of $36.59 billion. Additionally, the company's U.S. Healthcare segment showed improvement, and its cost savings initiatives contributed to the positive results.

1.c. Company Highlights

2. Walgreens Boots Alliance Q1 FY2025 Earnings Report

Walgreens Boots Alliance reported a solid first quarter for fiscal year 2025, with sales increasing 6.9% on a constant currency basis, driven by growth across all segments. Adjusted EPS of $0.51 declined 23% year over year, but still beat expectations. The company's cost management initiatives and relative strength in its US pharmacy services businesses helped offset weakness in its front-end retail business.

Publication Date: Feb -26

📋 Highlights
  • Cost Management Initiatives: - The company has made progress on cost management initiatives, which has driven operating earnings, offsetting weakness in the front-end retail business.
  • Pharmacy Services Strength: - The US pharmacy services business has shown relative strength, with comparable sales growing 8.5% driven by pharmacy, partly offset by a decline in retail sales.
  • Micro-Fulfillment Centers: - The deployment of micro-fulfillment centers has yielded successful results, with shipped volumes up 23% year-over-year, and cost to fill down by 13%.
  • Non-Core Assets: - The company is making progress on the sale process for Village Medical and evaluating options for Summit CityMD, with plans to redeploy any proceeds to reduce net debt and improve the balance sheet.
  • Guidance Reaffirmed: - The company has reaffirmed its adjusted EPS guidance of $1.40 to $1.80, driven by progress on cost savings, pharmacy services results, and footprint optimization program.

Financial Performance

As Manmohan Mahajan, Global Chief Financial Officer, noted, "Our progress to date is reflected in our reaffirmed adjusted EPS guidance of $1.40 to $1.80. We continue to execute on cost savings inclusive of our footprint optimization program. We are also encouraged by pharmacy services results to date."

Operational Progress

The company has made progress on its key priorities, including stabilizing the US retail pharmacy business, improving pharmacy operations, reframing reimbursement discussions, and repositioning its consumer retail business. The deployment of micro-fulfillment centers has yielded successful results, with shipped volumes up 23% year on year and cost to fill down by 13%. The company is also modernizing its pharmacy operations, with a focus on improving script retention rates and retaining store and pharmacy team members.

Valuation

With a current price-to-earnings ratio of -1.08 and a price-to-book ratio of 0.85, the stock appears undervalued. The company's dividend yield of 6.79% is also attractive, suggesting that the market is pricing in a significant amount of uncertainty. However, with the company's progress on its strategic priorities and cost savings initiatives, the stock may be due for a rebound.

3. NewsRoom

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First Look: CME outage, Black Friday shifts, AI job impact

Nov -28

Source: gurufocus.com

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Walgreens Unwraps Holiday Savings for 2025

Nov -19

Source: businesswire.com

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Oracle Corp Sees Significant Reduction in Jeremy Grantham's Portfolio

Nov -13

Source: gurufocus.com

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Paramount Global: Mario Gabelli's Strategic Exit with a -0.62% Portfolio Impact

Nov -12

Source: gurufocus.com

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Walgreens Launches Pharmacy Patient Advisory Board to Strengthen Patient Collaboration

Nov -06

Source: businesswire.com

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Walgreens Launches Enhanced Respiratory Index to Track Flu and COVID-19 Hotspots

Nov -04

Source: businesswire.com

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Walgreens names Mike Motz as CEO after going private with Sycamore Partners

Aug -28

Source: fastcompany.com

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Sycamore Completes Acquisition of Walgreens Boots Alliance, Forms 5 Companies

Aug -28

Source: pymnts.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.57%)

6. Segments

Pharmacy

Expected Growth: 4.0%

Walgreens' pharmacy segment growth is driven by increasing demand for specialty medications, expansion of Medicare Part D and Medicaid programs, and strategic partnerships with healthcare providers. Additionally, investments in digital transformation, such as online prescription refill and telehealth services, are enhancing customer experience and driving growth.

Retail

Expected Growth: 2.5%

Walgreens' 2.5% retail growth is driven by strategic investments in digital transformation, enhancing customer experience, and expanding healthcare services. Additionally, the company's focus on cost savings initiatives, partnerships, and acquisitions, such as the Rite Aid deal, have contributed to its growth momentum.

Wholesale

Expected Growth: 3.5%

Wholesale segment growth of 3.5% driven by increasing demand for healthcare products, strategic partnerships, and expansion into new markets. Additionally, Walgreens Boots Alliance's diversified customer base, including pharmacies, hospitals, and clinics, contributes to steady revenue growth. Effective supply chain management and cost-saving initiatives also support the segment's growth.

Health Care

Expected Growth: 3.8%

Walgreens Boots Alliance's 3.8% growth in Health Care is driven by increasing demand for prescription medications, expansion of healthcare services, and strategic partnerships. Additionally, the company's investments in digital health platforms and its loyalty program have contributed to the growth. Furthermore, the aging population and the need for chronic disease management have also fueled the segment's growth.

7. Detailed Products

Retail Pharmacy USA

Walgreens Boots Alliance operates a chain of retail pharmacies across the United States, offering a wide range of prescription and over-the-counter medications, health and wellness products, and photo services.

Retail Pharmacy International

Walgreens Boots Alliance operates a chain of retail pharmacies across the UK, Europe, and Asia, offering a wide range of prescription and over-the-counter medications, health and wellness products, and photo services.

Pharmaceutical Wholesale

Walgreens Boots Alliance operates a pharmaceutical wholesale business, providing medicines and healthcare products to pharmacies, hospitals, and other healthcare providers.

Health and Beauty Products

Walgreens Boots Alliance offers a range of health and beauty products, including skincare, haircare, and cosmetics, through its retail stores and online platforms.

Vaccination Services

Walgreens Boots Alliance offers vaccination services, including flu shots and other immunizations, through its retail pharmacies.

Healthcare Services

Walgreens Boots Alliance offers a range of healthcare services, including health clinics, infusion services, and specialty pharmacy services.

8. Walgreens Boots Alliance, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Walgreens Boots Alliance, Inc. faces moderate threat from substitutes due to the presence of online pharmacies and mail-order pharmacies, which offer convenience and competitive pricing.

Bargaining Power Of Customers

Walgreens Boots Alliance, Inc. has a large customer base, but individual customers have limited bargaining power due to the company's large scale and diversified product offerings.

Bargaining Power Of Suppliers

Walgreens Boots Alliance, Inc. has a moderate level of dependence on suppliers, particularly for pharmaceuticals and other healthcare products, which can impact its bargaining power.

Threat Of New Entrants

Walgreens Boots Alliance, Inc. operates in a highly regulated industry, which creates barriers to entry for new entrants, reducing the threat of new competition.

Intensity Of Rivalry

Walgreens Boots Alliance, Inc. operates in a highly competitive industry, with intense rivalry among established players, including CVS Health and Rite Aid, which can impact market share and pricing power.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 62.62%
Debt Cost 3.95%
Equity Weight 37.38%
Equity Cost 7.88%
WACC 5.42%
Leverage 167.49%

11. Quality Control: Walgreens Boots Alliance, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.98$

Current Price

11.98$

Potential

-0.00%

Expected Cash-Flows