Walgreen Co. Earnings: Here’s Why Investors are Selling Shares Now

Walgreen Co. (NYSE:WAG) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 4.41%.

Walgreen Co. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 18.06% to $0.85 in the quarter versus EPS of $0.72 in the year-earlier quarter.

Revenue: Rose 3.16% to $18.31 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Walgreen Co. reported adjusted EPS income of $0.85 per share. By that measure, the company missed the mean analyst estimate of $0.91. It missed the average revenue estimate of $18.43 billion.

Quoting Management: “This quarter we continued to see a strengthening in our pharmacy performance as we maintained strong margins and increased our retail pharmacy market share from 18.4 percent to 19.2 percent year over year,” said Walgreens President and CEO Greg Wasson. “This, in combination with our focus on cost control, and the contribution from Alliance Boots and related synergies, resulted in adjusted earnings per diluted share growth of 18.1 percent in the quarter. We also produced another strong quarter of operating cash flow of $1.4 billion. That said, our front-end sales are still not up to our expectations, and while the economy remains challenging, increasing customer traffic and front-end sales are our near-term priorities with a focus on pricing and promotion and the leveraging of our Balance® Rewards program, which now has 75 million members.”

Key Stats (on next page)…

Revenue decreased 1.79% from $18.65 billion in the previous quarter. EPS decreased 11.46% from $0.96 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.82 to a profit $0.81. For the current year, the average estimate is a profit of $3.27, which is the same with that ninety days ago.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute – click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)