Entering text into the input field will update the search result below

Walgreens Is Fundamentally Weak, While CVS Remains Strong

Philip Eriksson profile picture
Philip Eriksson


  • In this article, I dive deep into the similarities and differences between WBA and CVS.
  • While the two have overlapping and competing businesses - pharmacy & primary care - CVS is substantially more diversified in the value chain.
  • Moreover, while CVS is bloated with cash WBA is scrambling for it.
  • Both stocks have decreased 30% over the past year, but WBA is the outright sell and CVS is a hands-down buy.

Walgreens Pharmacy building

J. Michael Jones


I recently wrote an article explaining the intricacy and complexity of CVS.

CVS: A High Cash Flow Yield, But A Low Return On Capital

One point of discussion that I brought to light was the dominance

This article was written by

Philip Eriksson profile picture
I believe that successful investing boils down to the following question: is this company important and why? A company's financials are or will be a reflection of that. I want to invest in companies that I believe are / will be important and hold them over the long term. I have 7 years of investing experience and ardently follow company performance. I am currently a master's student at the Stockholm School of Economics. I hope that my insights and our discussion will lead to better long-term investments.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (31)

I worked for VillageMD and I agree with your assessment. VillageMD is bleeding money with zero oversight.
Philip Eriksson profile picture
@Xoxo1302 thanks for your first-hand experience!!
@Xoxo1302 what did you do there? I’m sure WBA has people to check if a company makes sense or not!
Long CVS and WBA and will
Continue to add to both on fundamental weakness in their share price. Started the position in WBA long before they owned boots in England, Duane Reed in NY, the vast purchases of rite aids across the U.S and the addition of Village MD and here is the sweetener- The stock
Is cheaper now than it was way back then but the dividend kept rising as it has for over 25 years making it a dividend aristocrat and it’s sheer size and value is how it became a Dow30
Pick. Perhaps that is why CEO ROZ Brewer invested 3 million in the shares recently at a price of roughly 34.00. Take a look at the price today. It moved in the bargain basement with a roughly 6.10% yield. Remember the Buffett rule: it’s not about the earnings in one quarter or even one year it’s about how much the equity will return over its lifetime and I would argue WBA will return plenty. Now I would argue as you pointed out CVS is also in the bargain basement and a good buy though the dividend isn’t as rewarding and their CEO hasn’t been buying the shares to show us she eats her own cooking.
Philip Eriksson profile picture
@Always Bullish good insight, but I would like to note the the CEO of CVS has been eating her own cookies! She recently purchased $1 million worth of shares around $69.
@Philip Eriksson thanks wasn’t aware of that
Philip Eriksson profile picture
@Always Bullish no problem, i missed it at first too. Until someone commented in a CVS article I wrote.
kevinsheehy profile picture
I'm not really sure I would say that Walgreen's is Fundamentally Weak, and that CVS is Fundamentally Strong. One only has to look at the stock price of each as Follows:
WBA YTD -17% WBA over the past 52 weeks -27%
CVS YTD -25% , CVS over the past 52 weeks -28%
One must remember that the market may not always be rational. It operates not only on the EPS of a company, but also on human Psychology. So if I were to look at each of these two stocks on the fundamentals of their share price, WBA wins out YTD and over the past 52 weeks. Until that changes, technically I would say WBA is winning, but not by much.
Philip Eriksson profile picture
@kevinsheehy well, I believe it is difficult to base ‘strength’ on historical stock price movements. Instead I think it’s much more useful to look at the business model of the two companies!!
@Philip Eriksson Thank you for food for thought.
Philip Eriksson profile picture
@fun times! glad you liked it!
Two companies with new CEOs doing WAY overpriced M&As in companies they don't understand to pitch healthcare story to Wall St .. yeah that ends well.
No Guilt profile picture

The more and more you look at it, this is why I like founder led enterprises than an MBA comes in and becomes CEO.
The main difference between these two companies is that cvs, via their pbm, determines what walgreens makes on about 25% of their business while the pbm is extremely profitable. Imagine walmart being able to hold that over target... it wouldn't be a contest. The biggest risk to cvs is that governments figure out how rediculous it is to allow this and they put an end to it.
Philip Eriksson profile picture
@R d B yes, well said 👌
Philip Eriksson profile picture
@R d B Do you know if CVS's pbm provides services for Walgreens specifically?
PennyPlanSupporter profile picture
$WBA has one of the strongest dividends in corporate America. At a 47% payout ratio it is even stronger than $T and $INTC when it comes to dividends.
Ted Waller profile picture
@PennyPlanSupporter The divvie is strong, but that may be the only return you get with WBA. I sold all my shares in 2021 at $48 when it became obvious where it was going. That might sound great, but my cost basis was $67. Sure, WBA has made moves to improve the business, but based on past performance I'm doubtful they will work out to the benefit of shareholders.
No Guilt profile picture

6% looks great on paper

Not as good when you factor in its below inflation.

They still need to successfully run the business.
beefy136 profile picture
does this pos ever stay up or is it on a downward spiral to 0.00 . bought in several times over the last 6 weeks and now have averaged down to 800 shares @72.23 wondering if i will ever break even ???
Philip Eriksson profile picture
@beefy136 hm. Can't be entirely sure, but if it does then I think it will take a while.
@beefy136 yep its a nearly daily occurrence. I hardly see a difference between it and CVS by going there. The mgmt of CVS does a better job or just makes it look so. Trends down for now and it doesn't matter how cheap it looks it still goes down.
Ted Waller profile picture
The only valid strategy for buying WBA is to take the big divvie while blindly waiting for the price to rise. But anyone looking at the company history will see its a poorly run company and maybe the div will be the total return.

Good article.
Philip Eriksson profile picture
@Ted Waller Yep, you could be completely right about that. Thanks :)
WBA is the better buy
The HANDS DOWN BUY company has an insurance company that is a THIEF. It steals peoples Social Security money by signing them up for a prescription drug plan when they acknowledge and clearly state NO I DO NOT WANT IT. After signing them up they contact Social Security and have the money removed from their Social Security check BEFORE they receive their check. When they are approached about the removal they acknowledge the complaint and are forced to refund the money they stole. Later they send a letter to the individual and state that you cannot make a change in the plan outside of the timeline window. They then recontact Social Security and STEAL YOUR MONEY AGAIN.

Social Security states that they cannot not stop this THIEF from stealing your money. Only the company that started this situation can stop it. You have clearly stated "NO I DO NOT WANT IT" already. The integrity of this "THIEF" is known and now you must trust this to stop it AGAIN?

The name of this company AETNA INSURANCE, a division of CVS Health.

I know this to be fact because it is currently happening to me personally.

Invest in your own choice of companies. Be very careful dealing with AETNA INSURANCE of CVS HEALTH.
arok79 profile picture
@kathyjoe1967 and that is my exact reason for never wanting to own CVS. Absolute trash business ethics.
beefy136 profile picture
@kathyjoe1967 we have eatna insurance thru my wifes job ,she is a nurse . she just had a hysterectomy done with 2 days in the hospital , our share of the surgury was 150.00 dollars with no deductible or coinsurance due so i think this is the greatest deal ever . the surgury cost was 39512.00 complete

Your wife's insurance is different than the one that AETNA signed me up for that I said I DO NOT WANT IT. They are stealing money from me. I do not care what your deductible is, I DID NOT WANT IT. If you think it is so good why don't you contact them and say you will pay for mine. SAME THING.

What part of NO do you not understand?
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.