Walgreens To Continue Revenue Growth In Q3 2019?
Walgreens (NYSE:WBA) is set to announce its Q3 2019 (ended May 2019) results on June 27, 2019, followed by a conference call with analysts. The market expects the company to report revenue close to $34.5 billion in Q3 2019 (ended May 2019), which would be an increase of 0.4 % y-o-y. Market expectation is for the company to report earnings of $1.43 per share in Q3 2019 (ended May 2019), down from $1.53 per share in the year-ago period.
Walgreens reported $127 billion in Total Revenues in FY 2018. This included 4 revenue streams:
- Retail Pharmacy USA- Pharmacy Drugs: $65.3 billion in FY 2018 (51.4% of Total Revenues). This includes the sale of prescription drugs in the US.
- Retail Pharmacy USA- OTC & Other: $27.3 billion in FY 2018 (21.5% of Total Revenues). This includes the sale of healthcare and retail products in the US.
- Retail Pharmacy International: $11.8 billion in FY 2018 (9.3% of Total Revenues). This includes the sale of prescription drugs and provision of pharmacy-related services internationally.
- Pharmaceutical Wholesale: $22.7 billion in FY 2018 (17.8% of Total Revenues). This includes distribution of prescription medicines to pharmacists.
We have summarized our key expectations from the earnings announcement in our interactive dashboard – What Has Driven Walgreens Boots Alliance’s Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full-Year 2019? In addition, here is more Consumer Staples data.
- Should You Pick Walgreens Stock At $20?
- After A 4% Fall Last Year Is Target A Better Pick Over Walgreens Stock?
- Will Walgreens Stock Rebound To Its Pre-Inflation Shock Level of Over $50?
- What’s Next For Walgreens Stock After A 9% Fall Yesterday?
- Is Walgreens Stock Undervalued At $32?
- What To Expect From Walgreens’ Q2?
Key Factors Affecting Earnings:
Revenue Growth to continue:
- Walgreens has seen a continuous rise in revenue for the past 4 quarters over the same period in the previous year. We expect this positive growth to continue for Q3 2019 (ended May 2019) and revenue for the quarter to be more than $35.5 billion.
- Retail Pharmacy USA- Pharmacy Drugs segment has been the highest contributor to Total revenues and has seen constant growth over the years. The revenue increased from $56.8 billion in 2016 to $65.3 billion in 2018. We expect overall growth to continue at this good pace in 2019.
- Retail Pharmacy USA- OTC & Other segment has remained nearly flat over the years. The revenue just increased from $27.26 billion in 2016 to $27.29 billion in 2018. We expect a slight growth in the segment for 2019.
- Retail Pharmacy International segment has seen negative growth in the last few years as the average revenue per store dropped. The revenue decreased from $12.8 billion in 2016 to $11.8 billion in 2018. We expect a slight growth in the segment for 2019 as the average revenue per store metric starts to stabilize.
Trend in Expenses:
- Cost of Sales is steady in the range of 75-77% of Total Revenue. We expect Q3 2019 (ended May 2019) in similar lines.
- Selling, General and Administrative expenses contributes the second highest to Total expenses (18-21%) after Cost of Sales. We expect them to be in a similar range for Q3 2019 (ended May 2019).
Full Year Outlook:
- For the full year, we expect gross revenue to increase by 6.3% to $135 billion, led by the growth in Retail Pharmacy USA- Pharmacy Drugs.
- EBITDA margin is expected to increase slightly to 9.4%.
Trefis has a price estimate of $69 per share for Walgreens’ stock. The value is based on the expectation that the company will continue its steady revenue growth while improving margins.
What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
Like our charts? Explore example interactive dashboards and create your own.