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. 

No comments: