Walgreens Boots Alliance (NASDAQ:WBA) has been in the spotlight recently due to its high trailing twelve-month dividend yield of 13.5%. However, despite this attractive yield, the stock has lost over half of its value year-to-date.
The sharp decline in WBA’s stock price, especially in the past quarter, has led to a reevaluation of its investment potential. Despite a slight earnings per share increase in the second quarter of fiscal year 2024, the company’s forward non-GAAP price-to-earnings ratio has dropped significantly. Additionally, a 48% dividend cut earlier in the year has impacted the stock’s dividend yield.
Furthermore, the company’s reduced earnings outlook and expectations of revenue weakness have raised concerns among investors. WBA’s earnings guidance has been lowered multiple times, and analysts predict a significant decline in earnings for the next financial year. Similarly, sales figures are expected to decline in the fourth quarter of fiscal year 2024.
While WBA has reported positive operating income in the third quarter of fiscal year 2024, the company continues to face challenges in its financial performance. Despite efforts to improve profitability, including store closures and investments in customer experience, the stock remains undervalued from a market multiple standpoint.
In conclusion, the future outlook for Walgreens Boots Alliance remains uncertain, with the company’s financial performance expected to face continued challenges. As a result, maintaining a cautious approach to investing in WBA is advisable, with a Sell rating being the prudent choice.