Walgreens stock soars after earnings report

WAGstock.pngClick chart for more data. By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- Shares of Walgreen & Co. spiked almost 12% Tuesday after the nation's largest drugstore chain posted fiscal fourth-quarter earnings and revenue that topped Wall Street expectations.

Walgreens (WAG, Fortune 500) reported a profit of $470 million, or 49 cents, for the three months ended Aug. 31, up 11.4% from a year earlier. The Deerfield, Ill.-based company brought in $16.9 billion in sales, up 7.4% compared to a year earlier thanks to 6.5% rise in prescriptions sales.

Analysts polled by Thomson Reuters were looking for Walgreens to earn 44 cents per share on revenue of $16.8 billion.

Investors were particularly cheery about the drugstore's thicker profit margin, which increased to 28.4% during the quarter from 27.7% a year earlier, thanks to aggressive cost-cutting, said Jeff Jonas, analyst at Gabelli & Co.

"Overall, sales at the front of the store are still depressed because of the slowing economy and tight consumer. Pharmacy sales are doing moderately OK, but revenue growth will remain muted" Jonas said. "But if Walgreens can continue to manage costs through this economy as it has been, it should do well."

Walgreens said it reached its cost reduction targets for the year, and is on track to save $1 billion is fiscal 2011.

Jonas said the drugstore, which bought New York-based Duane Reade earlier in the year, is also on track to improve its financial performance as it continues to gain market share from Rite Aid (RAD, Fortune 500) and independent pharmacies and benefit from a new wave of higher-margin generic drugs.

Though Walgreens does not issue guidance, Jonas said the fact that the company has returned $2.2 billion, almost five times last year's amount, to shareholders during the fiscal year in dividends and stock repurchases signals a bright future.

For the current quarter, analysts expect Walgreens to boost earnings by 7% and revenue by 6%.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,717.21 255.89 1.55%
Nasdaq 4,461.45 78.60 1.79%
S&P 500 1,955.06 27.95 1.45%
Treasuries 2.28 0.05 2.29%
Data as of 11:22am ET
Company Price Change % Change
Apple Inc 104.81 1.82 1.77%
Bank of America Corp... 16.70 0.30 1.83%
AT&T Inc 33.59 -0.91 -2.64%
Facebook Inc 80.02 1.65 2.11%
Microsoft Corp 44.75 0.37 0.83%
Data as of 11:07am ET

Sections

Facebook CEO Mark Zuckerberg gave a Q&A at Beijing's Tsinghua University entirely in Chinese. More

Regulators are about to reveal the results of an extensive health check of Europe's top 130 banks, indicating which may need a cash infusion. More

Facebook CEO Mark Zuckerberg gave a Q&A at Beijing's Tsinghua University entirely in Chinese. More

Startups focusing on "ag tech," or agricultural technology, are gaining the attention of farmers and investors More

Concern about the stock market has sent interest rate of 15-year mortgage to lowest level of the year. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.