Portfolio Update
The FiveTwenty portfolio received $80.72 in dividends in the past week. GPC and MDU paid their quarterly dividend during the week.
| Past Week Dividend | $80.72 |
| Current Quarter Dividend (Q1 2023) | $80.72 |
| LifeTime Dividend | $8,189.16 |
| Estimated Annual Dividend | $7,847.73 |
The capital allocation for the week of 01/08/2022 to 01/14/2022 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 29 of 2022, the company reported Q4 and FY2022 earnings on 10/13/2022, and Q1 2023 earnings on 01/05/2023. Additionally, the share price decreased 3.7% from $38.03 to $36.61 during the same period.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 47 years | 47 years | |
| Yield | 5.44% | 5.18% | 2.39% |
| Payout Ratio | 42.57%1 | 35.37%2 | |
| P/E | 8.121 | 7.042 |
1 computed using TTM adjusted EPS of $4.51 as of Q1 2023
2 computed using TTM adjusted EPS of $5.40 as of Q3 2022
Q1 2023 earnings report
Did WBA’s latest earnings report raise any warning flags?
In Q1 2023, WBA saw a continuation of the trends from previous quarters. Comparable retail and pharmacy sales growth being offset by declines in the AllianceRx business. At the same time, the Healthcare segment experiences accelerated growth through the acquisition of Summit Health. WBA is nearing the end of comparisons to year ago quarters that benefited from COVID-19 vaccination activity. Furthermore, the quarterly year-over-year adjusted net income and adjusted EPS declines have been narrowing and we anticipated they will start growing again in the H2 2023.
Overall, revenue declined 1.5%, adjusted net income decreased 31%, and adjusted EPS were 31% lower than in Q1 2022.
| Revenue (in millions) | Adj. Net Income (in millions) | Adj. EPS . | |
| Q1 2022 | $33,901 | $1,455 | $1.68 |
| Q1 2023 | $33,382 | $1,004 | $1.16 |
| % Change | (1.5)% | (31)% | (31)% |
Additional noteworthy developments during the quarter:
- Invested $3.5 billion in debt and equity into VillageMD’s acquisition of Summit Health, which closed on 01/03/2023.
- WBA took a $6.5 billion pre-tax charge related to previously announced opioid litigation settlements and other opioid related matters.
- During November and December, the company sold 19.2 million shares of AmerisourceBergen totally after-tax cash proceeds of $3 billion.
Looking ahead, WBA maintained its full-year adjusted EPS guidance of $4.45 to $4.65 per share and raised its full year sales guidance to between $133.5 and $137.5 billion. Furthermore, the company anticipates core business growth of 8-10%, as well as COVID-19 headwinds on (18)% to (16)% and a negative currency impact of (1)% on its full year financial results.
Thesis
Why are we adding to our position in WBA?
WBA has continued to successfully execute on its strategy build out the Heathcare segment, while at the same time growing its core business of retail and pharmacy sales. Despite this, the share price has continued to be depressed during this period of transition to the point where the company now sports a 5.44% yield. However, with a payout ratio in the low 40% the dividend should be safe. Therefore, we continue to add to our position at an attractive valuation.
Previous Articles
- 2022 Week 29: Walgreens Boots Alliance (NASDAQ: WBA)
- 2022 Week 14: Walgreens Boots Alliance (NASDAQ: WBA)
- 2021 Week 39: Walgreens Boots Alliance (NASDAQ: WBA)
- 2021 Week 7: Walgreens Boots Alliance (NASDAQ: WBA)
Additional Research
Photo by Jennifer Shishmanian on Unsplash
One Reply to “2023 Week 2: Walgreens Boots Alliance (NASDAQ: WBA)”
Comments are closed.