Sunday, October 27, 2013

Walgreen Eyes Long Term Growth As Market Gears Up For Q4 Earnings

by Sarfaraz A. Khan and Mehreen Tanveer

The leading American drugs retailer Walgreen (WAG) is gearing up to release its quarterly results in the current week. The company earns two-thirds of its revenues from prescription drugs and the rest from general merchandise, over-the-counter medications, cosmetics, and groceries sales.

Monthly Sales

In its previous monthly results for August, Walgreen reported an increase in sales of 5.6% from $5.84 billion last year to $6.17 billion in 2013. Before that, in July, Walgreen reported sales of $6.03 billion, an 8% year-over-year increase. The company has so far reported similar comparable front-end sales growth numbers for both July and August of 2.3% and 2.2% respectively. Similarly, both months witnessed a drop in comparable store traffic of 1.2% (July) and 1.5% (August). On the other hand, basket size increased by 3.5% in July and 3.7% in August.

Fourth Quarter Expectations

Walgreen will report its Q4 results on Tuesday, October 1, before the markets open. For the current quarter, analysts are expecting year-over-year earnings growth of 40% to $0.73 per share and a 5% growth in revenues to $17.95 billion. In the fourth quarter, the company will likely report a LIFO provision of $85 million while net interest expense is expected to be between $57 million and $60 million. 

As far as an earnings beat goes, 2013 has not been a good year for Walgreen. In its current fiscal year, Walgreen has reported … read full article at Seeking Alpha