Walgreen Jumps on EPS Beat

Shares of Walgreen (WAG) are trading to the upside by 7.6% to $39.00 as of 09:08, on better-than-expected fiscal Q1 EPS of $0.46 versus estimates of $0.44. Net income rose 5.5% to $455.5M, on sales growth of 10.4% to $14.03B, but fell short of analyst expectations for sales of $14.11B. Same-store sales increased 5.4%. Walgreen said it faced a tough comparison with last year's 24.9% earnings increase, driven by introductions of generic versions of certain blockbuster drugs. Nevertheless, prescription sales, which accounted for nearly two-thirds of quarterly sales, increased 11.1% y/y.

Walgreen President Gregory D. Wasson said the company is "seeing especially strong sales among our private-brand products as the economy softens and consumers search for more value." (Earnings call transcript later today). Walgreen plans to expand its number of Take Care Health Clinics to more than 400 by the end of 2008, from 119 at present. "Our prime locations provide 6,000 points of care – our biggest asset and one that can’t be easily replicated. For us, the sweet spot for future growth is where health care needs converge with these convenient locations," explained Mr. Wasson. Walgreen lost 0.4% to $36.25 on Thursday. Walgreen is a 7.6% component of Retail HOLDRs (RTH) and a 3% holding of Consumer Staples Select Sector SPDR (XLP).

Sources: Press release, Bloomberg, MarketWatch
Additional Reading: Is Walgreen Co. Reasonably Valued? • November Same-Store Sales Roundup: Mixed Bag

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Comments

[TIRED]

walgreens is a very good stock to buy now i hold wag for years and had stock splits i hold more than a block of shares am considering buying more jim cramer bad mouths the stock because he owns rad an cvs he should keep his mouth shut walgreen will go up from here it is the best