Message Font: Serif | Sans-Serif
 
No. of Recommendations: 4
As with all names, welcome feedback. CVS is a hard one. Hard cause:

*I never bothered to look at it until recently (another sw idea; like Hacker's website a real eyesore but this guy is deserving of your consideration - http://www.freedommount.com/)

*they buy shares, they pay a dividend (mostly irrelevant though even as they plan to reach a 35% payout ratio), they generate a lot of FCF (2.2b CapEx seen for 2015 vs. nearly 8b gcf), and it isn't that expensive considering age of population, script growth etc.

*and the retail business is ok but the hard part is the PBM side. They see a "modest decline" in gross margins there (11 to 12.3% top line growth in 2015) with modest SGA leverage though a forecasted 6.75-10.75% operating growth so maybe slightly lower margins

*just don't know what this would be worth. It would be worth 12x, that's for sure.

thoughts?

Comp Stores

2014-Q4 +1.6% 7981
Q3 +2.0
Q2 +3.3
Q1 +1.4%
2013 7600
2012 7458
2011 7300

3-2-15, $104.10, 119.9-130.4, 25.8-28.1, 18.2-19.8, dy-1.1%, fcy-3.4%, gcy-5.0%; ni=4645, cf=6576, cex=2136

Position
I own a dink.

Conclusion
VL is at $5.00 (11% EPS growth with 4% top line) and company suggested adjusted at $5.19 (20x or 16% growth). Retail is growing by 2% sqft a year with the PBM accounting for the bigger top line gains. Company forecasts 9 to 13% net revenue growth 2013-2018 with operating profit 7-9% with EPS helped by buybacks (including higher leverage). It is hard to make sense of this company which traded near 12x before and sports a much higher valuation today – in part due to contract losses in the PBM side before which have been rebuilt and then some but I’m not sure how to forecast this.

Q4 Dec 14
Sales up 12.9% with operating profit up 4.7%
Comp up 1.6% but front store down 7.2% as hit from tobacco cost them 8%
Adjusted EPS at 1.21 up 8.4%; GAAP was 1.14

Year
Sales up 9.9
Adjusted EPS of 4.22 (3.96) but includes 27c loss on early debt payment; adjusted EPS sans debt item and legal gain in 2013 up 13.5% to $4.49
For year, comps up 2.21%; front down 4% or -0.5% sans tobacco
Sqft up 2.4% in 2014

Forecast
Adjusted EPS of 5.05-5.19 (20x)
Q1 at 1.06-1.09 (99-1.02 GAAP)
FCF of 5.9-6.2b; CFFO at 7.6-7.9b
CapEx of 2300

Research
CS at 5.17 and 5.93 (15-16)
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.