Walgreens Earnings: This Isn’t What Shareholders Expected

S&P 500 (NYSE:SPY) component Walgreens (NYSE:WAG) reported its results for the first quarter. Walgreen operates a chain of retail drug stores.

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Walgreens Earnings Cheat Sheet

Results: Net income for Walgreens fell to $413 million (43 cents per share) vs. $554 million (63 cents per share) a year earlier. This is a decline of 25.5% from the year-earlier quarter.

Revenue: Fell 4.6% to $17.32 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Walgreens reported adjusted net income of 58 cents per share. By that measure, the company fell short of mean estimate of 68 cents per share. Analysts were expecting revenue of $17.41 billion.

Quoting Management: “During a quarter that included a number of non-operational items, as well as the ongoing Express Scripts impact, we saw the underlying performance of our business strengthen with improved gross profit margins and an upswing in comparable prescriptions filled in the quarter,” said Walgreens President and CEO Greg Wasson. “We also were pleased with the business performance of our strategic partner, Alliance Boots, and are on track to meet our first-year synergy targets with them. As I have said before, Walgreens and Alliance Boots both perform well in historically tough economic climates, and together we now are better positioned for growth.”

Key Stats:

Revenue has fallen for the last three quarters in a row. In the fourth quarter of the last fiscal year, revenue declined 5% to $17.07 billion while the figure fell 3.4% in the third quarter of the last fiscal year from the year earlier.

For two quarters in a row, the company has come in under analyst estimates. In the fourth quarter of the last fiscal year, it missed expectations by 3 cents with net income of 52 cents versus a mean estimate of net income of 55 cents per share.

Net income has dropped 20.8% year-over-year on average across the last five quarters. Performance was hurt by a 55.4% decline in the fourth quarter of the last fiscal year from the year-earlier quarter.

Looking Forward: Expectations for the company’s next-quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the second quarter has risen to 94 cents per share from 89 cents. Over the past three months, the average estimate for the fiscal year has climbed from $3.09 per to share to $3.21.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)