3Q17 Earnings: CVS Beats on Top and Bottom Lines



Snapshot of the series

The Rhode Island–based CVS Health (CVS) reported its results for 3Q17 on Monday, November 6. The results relate to the three-month period that ended on September 30, 2017.

As with the first two quarters of the current fiscal year, the pharmacy giant did better than Wall Street’s earnings and revenue estimates. It reported earnings per share of $1.50, beating the street by 2 cents. The top line grew 3.5% to $46.2, ~$10 million more than the consensus expectations.

Management narrowed its earnings guidance for fiscal 2017. It now expects earnings to lie in the $5.87–$5.91 range, compared to the $5.83–$5.93 guided earlier.

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Valuations and recommendations summary

CVS Health is currently trading at a one-year-forward earnings multiple of 11.1x, touching its three-year low valuation. Close competitor Walgreens Boots Alliance (WBA) trades at a slightly higher valuation of 12.2x.

CVS is covered by 24 Wall Street analysts, who have rated the company a 2.2 on a scale of 1 (strong buy) to 5 (sell).

About CVS Health

CVS Health is the largest pharmacy retail chain in the United States, and it operates 9,700 stores. Walgreens is the second-largest pharmacy chain, operating around 8,100 stores in the country.

However, CVS is more than a drugstore chain. It’s also one of the largest pharmacy benefits managers (or PBMs) in the country. Plus, it runs 1,100 walk-in medical clinics and owns a dedicated senior pharmacy care business.

With a market capitalization of $69.85 billion (as of November 7), CVS has a weight of ~4.8% in the SPDR Consumer Staples Select Sector ETF (XLP).

What’s in this series?

Learn more about CVS Health’s financial performance in 3Q17, its year-to-date stock market performance, and Wall Street recommendations in this series.


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