Walgreens Earnings Preview

Investors are lowering their expectations ahead of Walgreen’s quarterly earnings results. Walgreen’s is expected to report their fiscal third quarter 2010 results before the market opens on Tuesday, June 22.

 

Several Wall Street analysts have downgraded Walgreens shares in recent days following the fallout between Walgreens [[WAG]] and CVS Caremark [[CVS]].

 

The current Wall Street consensus estimates are for revenues of $17.14 billion and EPS of $.56. This would imply a 6% growth in revenues over last year’s $16.21 billion, and a similar 6% increase in earnings over the $.53 per share earned in the previous year.

 

Last quarter, Walgreen’s reported earnings results that were $.03 below Wall Street’s consensus estimates. However, shares traded up 1.6% following the earnings report.

 

In 2010, Walgreen’s shares have fallen nearly 18%, and have underperformed the S&P 500 performance. Last year, Walgreens has gained 49% as the stock outperformed the 24% gain in the S&P 500.

 

Walgreen’s stock is currently trading at 11x consensus 2011 EPS estimates. We would expect Walgreens shares to decline further in the short term following the earnings release.

 

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