Friday, April 29, 2016

CVS Q1 2016 Monthly Report

CVS opened the year on 1/4/16 at $96.06 and closed out the quarter on 3/31/2016 at a price of $103.73, representing a 7.98% gain. With a price target of $126.47, 24.72% upside still remains. Since buying in at $91.66, CVS has provided us with captain gains yield of 12.76%. On 1/20/2016 a 0.425 dividend was paid out.  

CVS has a P/E ratio of 19.8 as of 3/31/2016, which is in line with the S&P 500 average.  One key multiple that shows CVS is undervalued compared to its peers is their P/S ratio. CVS has a P/S ratio of 0.62 as of 3/31/2016 compared to the S&P 500 average of 1.7. With expected revenue growth of 10% supported by recent acquisitions of Target pharmacies, CVS is putting itself in a phenomenal position to be successful.

CVS reported fourth quarter earnings on February 9th 2016. CVS reported strong fourth quarter profit growth with an adequate end to a phenomenal year-end 2015. CVS is continuing to grow through the acquisitions of Target pharmacies and Omnicare, a leader in long-term care pharmacy. The integration activities with target are under way and already stores have been transformed. Conversions in the next quarter will continue to increase and should be completed by the end of FY 2016. 

With conversions to be completed by the end of FY 2017, there is huge potential for an increase in the revenue stream once the new CVS pharmacies within target see the market. CVS is a great long-term value stock that I believe will continue be the backbone of our healthcare holdings. 

Thursday, April 14, 2016

BAC Q1 2016

BAC Q1 2016

Bank of America reported first quarter earnings of $0.21 on April 14, which beat analyst estimates of $0.20. However, they reported revenue of $19.7B (-8.0% Y/Y), missing estimates by $600M. Although they missed on revenue the stock closed up 2.5% on the day.
BAC saw an increase in Net Interest Income, but saw a decrease in non interest income because capital markets and other related activities. Banking sources of non interest income were performing well. Loans are growing across the bank. Cost went down 3%, and the costs are expected to continue to go down.  Credit quality is strong in the quarter, besides those for the energy sector. Although provisions for credit losses related to the energy loans, BAC made adjustments to lower energy exposure because of the low energy prices, and the volatility. The efficiency ratio improved to 73% compared to the 77% in Q1 2015.  The possibility of increased interest rates sometime toward the end of the year will only increase NII for BAC. They are not performing at a spectacular level, it is nothing people should be worried about, which is why I believe we saw an increase in price today. BAC is still very cheap.