2022 Week 29: Walgreens Boots Alliance (NASDAQ: WBA)

Portfolio Update

The FiveTwenty portfolio received $145.86 in dividends in the past week. BEN and LEG

Past Week Dividend$145.86
Current Quarter Dividend (Q3 2022)$145.86
LifeTime Dividend$4,753.02
Estimated Annual Dividend$5,732.64
Dividend Scorecard

The capital allocation for the week of 07/17/2022 to 07/23/2022 will be used to add to our position in Walgreens Boots Alliance (NASDAQ: WBA)

WBA – Position Update

Since our last check-in on WBA in week 14 of 2022, the company reported Q3 2022 earnings. In addition, the share price decreased 13.3% from $43.86 to $38.03.

TTMPrev. Update10-year median
Dividend Streak47 years46 years
Yield5.18%4.33%2.34%
Payout Ratio35.37%132.65%2
P/E7.0417.542
Entry Criteria Scorecard

1 computed using TTM adjusted EPS of $5.40 as of Q3 2022
2 computed using TTM adjusted EPS of $5.82 as of Q2 2022

Q3 2022 earnings report

Did WBA’s latest earnings report raise any warning flags?

In Q2 2022, WBA saw a 4.2% decrease in sales over the same quarter a year ago. Retail sales growth in both the US and International segments as wells as from Walgreens Health acquisiotions were more than offset by the decline in the AllianceRx Walgreens business. The quarter also lapped prior year peak COVID-19 vaccinations. Overall, revenues dropped 4.2%, adjusted net income decreased 36.4%, and adjusted EPS were 36.4% lower.

Revenue
(in millions)
Adj. Net Income
(in millions)
Adj. EPS
.
Q3 2021$34,030$1,313$1.51
Q3 2022$32,597$834$0.96
% Change(4.2)%(36.4)%(36.4)%

Additional noteworthy developments during the quarter:

  • On 07/13/2022, WBA declared a quarterly dividend of $0.48 per share, an increase of 0.5%, payable 09/09/2022 to shareholders of record as of 08/19/2022.
  • The company completed the strategic review of the Boots business and decided to keep the business.

Thesis

Why are we adding to our position in WBA?

For the first 9mo of 2022, WBA grew sales from continuing operations by 2%, while at the same time the share price has plunged more than 25%. The business will have some though year-over-year comparisons due to the sharp decrease in COVID-19 vaccinations. However, we continue to believe in the long-term prospects of the business and therefore continue to add to our position at an attractive valuation.

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