WBA - Embedded Expectations Analysis - 2020 08 20
Walgreens Boots Alliance, Inc. (WBA:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with an 18.2x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may have concerns about their gross margin, script and transaction growth, and omnichannel product and convenience services demandSpecifically, management may lack confidence in their ability to sustain adjusted retail gross margin, improve script growth, and sustain adjusted operating income. They may also be overstating the position of their online business in the U.K., and they may have concerns about the potential of their neighborhood destination concept and the sustainability of government contributions and capex. Moreover, they may lack confidence in their ability to sustain transaction growth and Find Care platform traffic. Management may also have concerns about the continued slowdown in the high street segment, the sustainability of omnichannel product and convenience services demand, and costs of increasing inventory levels. In addition, they may lack confidence in their ability to keep their stores functional, improve their Transformational Cost Management Program, and continue reducing costs
Walgreens Boots Alliance is a holding company. Through its subsidiaries, the company is engaged in retail and wholesale pharmacy. The company's operations are organized into three divisions, which are also its reportable segments: Retail Pharmacy USA; Retail Pharmacy International; and Pharmaceutical Wholesale. The Retail Pharmacy USA division has pharmacy-led health and beauty retail offerings. The Retail Pharmacy International division has pharmacy-led health and beauty retail businesses. The Pharmaceutical Wholesale division, which mainly operates under the Alliance Healthcare brand, supplies medicines, other healthcare products and related services to pharmacies, doctors, health centers and hospitals.
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