Walgreens Boots Alliance (NASDAQ: WBA) is not having a good year. Mr. Market, for instance, paid $46.02 for WBA on 16 July 2021.
In comparison, Mr. Market paid $141.56 for Walmart (WMT) on the same day. Thus, Mr. Market thinks Walgreen’s 9,021 US drugstores offer less value than Walmart’s supercenters.
Additionally, Walmart, CVS Health (CVS), Walgreens (WBA), and RiteAid (RAD) will pay $26 million to settle an opioid lawsuit filed by two New York state county governments, Reuters reports. In the suit, the Nassau and Suffolk county governments allege the retailers caused addictions and deaths by filling questionable painkiller prescriptions.
Did Walgreens Make money from COVID-19
Many people will wonder if Walgreens (WBA) made more money during the COVID-19 pandemic.
Some aspects of the pandemic, including social distancing and vaccination, could benefit Walgreens. Walgreens stores in the US provide vaccinations and Walgreens’ neighborhood stores could be a safer alternative to crowded supercenters.
Walgreens did make more money during the pandemic year. For example, Walgreens’ quarterly operating income rose from -$1.683 billion on 31 May 2020 to $1.134 billion on 31 May 2021. In addition, Walgreens’ quarterly gross profit profit rose from $5.961 billion to $6.646 billion in the same period.
Conversely, Walgreens Boots Alliance’s quarterly revenues fell from $34.631 billion on 31 March 2020 to $34.03 billion on 31 March 2021. Stockrow estimates WBA’s revenue growth shrank by -1.74% in the quarter ending on 31 May 2021. The revenue growth rose by 4.6% in the quarter ending on 28 February 2021.
Is Walgreens Generating Cash?
Walgreens Boots Alliance (WBA) Generates enormous amounts of cash. For instance, WBA reported quarterly operating cash flow of $1.753 billion on 31 May 2021. The quarterly operating cash flow grew from $916 million on 31 May 2020.
Similarly, the quarterly ending cash flow rose from -$45 million on 31 May 2020 to $492 million on 31 May 2021. Impressively, Walgreens Boots Alliance did not borrow money during the pandemic.
It reported six straight quarters of negative financing cash flows over the past six months. For instance, Walgreens reported a quarterly financing cash flow of -$1.209 billion on 31 May 2021. Walgreens’ total debt fell from $41.776 billion on 31 May 2020 to $41.136 billion on 31 May 2021.
What Value Does Walgreens Boots Alliance Have?
Theoretically, Walgreens Boots Alliance (WBA) could have enormous value. For instance, WBA had $91.92 billion in Total Assets on 31 May 2021. The Total assets rose from $86.44 billion on 31 May 2020.
Walgreens Boots Alliance’s footprint is vast. The company claims to operate over 21,000 drugstores in over 25 countries. In addition, Walgreens Boots Alliance claims its platform services almost 40,000 pharmacies worldwide.
In addition to the United States, Walgreens Boots Alliance operates 2,336 Boots drugstores in the United Kingdom, 1,165 Farmacias Benavides drugstores in Mexico, 217 Farmacias Ahumada drugstores in Chile, 285 Boots drugstores in Thailand, and 89 Boots drugstores in the Republic of Ireland. Boots UK also operates 550 optometry practices.
On 1 November 2020, WBA and McKesson formed a combined pharmaceutical wholesale business in Germany. In addition, WBA claims to be the 7th largest beauty company in the world with over 20,000 stores in 16 markets.
Is Walgreens a Value Investment?
Conversely, Walgreens makes small amounts of cash from its enormous business. For instance, Walgreens Boots Alliance (WBA) had $1.1421 billion in cash and short-term investments on 31 May 2021. The cash and short-term investments grew from $943 million on 31 May 2020.
I think Walgreens Boots Alliance is not a value investment because it has a small amount of cash. Walgreens grows, but it is not keeping cash.
However, Walgreens Boots Alliance pays an impressive dividend. For instance, WBA shares paid a 46.76¢ quarterly dividend on 11 June 2021. Overall, WBA shares offered a $1.87 Last-Twelve-Months (LTM) dividend and a 3.94% dividend yield on 13 July 2021.
I consider Walgreens Boots (WBA) an impressive and cheap dividend stock with some value characteristics. However, I think Walgreens is not a value investment because it cannot retain cash.