Will Walgreen Recover in 2012's Second Half?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

With half of 2012 in the record books, it's important to take a look at whether the stocks that interest you can live up to their full potential. By making sure you know about a company's future plans and possible challenges, you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Walgreen (NYSE: WAG  ) . As we saw in our look at Walgreen last month, the drugstore retailer has seen some challenges after losing an important relationship with a pharmacy benefits manager. As competitors scurry to take advantage of the situation, how can Walgreen get its mojo back? Let's take a quick look at Walgreen's prospects for the rest of the year and beyond.

Stats on Walgreen

Average Stock Price Target $35.36
Fiscal 2012 EPS Estimate $2.61
Fiscal 2013 EPS Estimate $2.93
Fiscal 2012 Sales Growth Estimate (0.4%)
Fiscal 2013 Sales Growth Estimate 1%
CAPS Rating (out of 5) ***

Source: Yahoo! Finance.

Can Walgreen get healthy again?
There's no disputing that Walgreen has suffered a great deal from its ongoing dispute with Express Scripts (Nasdaq: ESRX  ) . Although the companies agreed in June to drop lawsuit claims against each other, a lack of a deal going forward has forced many Express Scripts members to turn to competitors CVS Caremark (NYSE: CVS  ) and Rite Aid (NYSE: RAD  ) . The effect has definitely been measurable and significant, with a 10% drop in same-store sales in June. Both rivals hope to hold on to the prescription customers they've gained even if Walgreen and Express Scripts come to terms.

But Walgreen does have some things going for it. Health-care reform should push more prescription customers into the mix, and Walgreen should get its fair share of increased demand. Moreover, between a push into groceries and its acquisition of Europe's Alliance Boots, the company has found at least one roadmap toward potential future growth.

One interesting move Walgreen made recently was to name retired McDonald's (NYSE: MCD  ) CEO Jim Skinner as chairman of its board of directors. The move could help Walgreen direct its future course while giving CEO Gregory Wasson some help in integrating the company's acquisitions.

All in all, Walgreen has gotten through tough times before. With a fairly substantial drop, today's stock price represents a good buying opportunity if you believe in the drugstore chain's strategy going forward.

Walgreen has good prospects, but it's not the only good stock out there. Let me invite you to learn about three smart long-term stock plays in the Fool's latest special report. It's yours for the taking and is absolutely free, but don't miss out -- click here and read it today.

Click here to add Walgreen to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Express Scripts and McDonald's. Motley Fool newsletter services have recommended buying shares of Express Scripts and McDonald's. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 19, 2012, at 11:34 AM, TMFGalagan wrote:

    After this went to press, this morning's announcement that Walgreen and Express Scripts have made a new deal pushed shares up more than 10% as of now:


    dan (TMF Galagan)

  • Report this Comment On July 20, 2012, at 1:18 AM, AgAuMoney wrote:

    For a close today up well over 11%. Makes my composite entry over multiple buys the last few weeks of about $30 look pretty good. Here's hoping it sticks! :)

    But even if it doesn't, I'm in it long-term... for as long as WAG can grow earnings and grow dividends.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1949788, ~/Articles/ArticleHandler.aspx, 10/27/2016 7:34:06 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 10 hours ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:00 PM
WBA $82.30 Down -0.15 -0.18%
Walgreens Boots Al… CAPS Rating: ****
CVS $87.57 Up +0.16 +0.18%
CVS Health CAPS Rating: ****
ESRX $70.39 Up +0.32 +0.46%
Express Scripts CAPS Rating: *****
MCD $112.11 Down -0.61 -0.54%
McDonald's CAPS Rating: ***
RAD $6.79 Down -0.22 -3.14%
Rite Aid CAPS Rating: ****