Walgreens Stock Looks Like a Buy Before Its Q2 Earnings

Walgreens Boots Alliance is scheduled to release its earnings report for the second quarter of fiscal 2021 on March 31 before the market bell. What can investors expect from Walgreens’ earnings report? Should you buy WBA stock before the earnings report?

Founded in 2014, Walgreens is a pharmacy-led health and wellbeing company. The company sells its products and services through more than 9,500 retail drugstores.

Walgreens is expected to report its earnings for the second quarter of fiscal 2021 on March 31 during the pre-market trading session. The company has scheduled an earnings conference call on the same day at 8:30 a.m. ET.

In the second quarter, Wall Street analysts expect Walgreens to post sales of $35.53 billion, which would be 0.8 percent lower than $35.82 billion in sales in the second quarter of fiscal 2020. Analysts also expect Walgreens to post an adjusted EPS of $1.11 in the second quarter compared to $1.52 in the same quarter a year ago. In the first quarter of fiscal 2021, Walgreens reported an adjusted EPS of $1.22 and sales of $36.3 billion.

On March 30, Walgreens announced that it plans to work with InComm Payments to introduce a bank-account product that will be associated with a Mastercard debit card. MetaBank, which will also issue the debit cards, will open the bank accounts. Cardholders will be eligible to earn Walgreens rewards on both in-store and online purchases under the new scheme.

In a press release, Walgreens said, “This agreement is part of Walgreens’ alternative profit strategy and recently announced broader initiative to launch new financial products and services that reinforce its ongoing commitment to offering differentiated services and benefits to its customers.”

WBA stock pays an annual dividend of $1.87 per share with a dividend yield of 3.55 percent.

According to estimates compiled by Market Beat, analysts' consensus target price is $46.24 for WBA stock, which is 12.5 percent below its current price. Among the 17 analysts tracking WBA, two recommend a buy, 13 recommend a hold, and two recommend a sell. The highest target price of $56 is 6 percent above the stock's current price, while the lowest target price of $33 is 37.6 percent below the stock's current price.

Wall Street analysts upgraded WBA stock before its second-quarter earnings results. Morgan Stanley raised its target price on the stock to $52 from $40, while Cowen boosted its target price to $53 from $41.

Walgreens has seen its share surge in home delivery orders. The company has benefited from coronavirus testing, with nearly 3 million tests conducted thus far. With the COVID-19 vaccine campaign, Walgreens is expected to witness steady sales growth in the near future.

WBA stock trades at an NTM PE multiple of 10.7x, which looks attractive compared to its peers. Target and Walmart Walmart stocks are trading at NTM PE multiples of 22.8x and 25.1x, respectively. 

WBA stock has gained 33 percent YTD and 16 percent over the last year. However, the stock is down nearly 25 percent from levels of about $69 seen at the end of 2018.