Which Will Deliver the Most Value: Rite Aid, Walgreen, or CVS?http://www.fool.com/investing/general/2013/12/27/which-will-deliver-the-most-value-rite-aid-walgree.aspx Anh HOANG
December 27, 2013
Rite Aid (NYSE: RAD) has made its shareholders extremely happy; its share price has jumped significantly since the beginning of the year, from around $1.30 per share to nearly $6 per share. However, no trees could grow to the sky. Rite Aid recently took a hit, dropping down to nearly $5 per share in just half a month.
While Rite Aid is considered a good turnaround story, its bigger peers CVS Caremark (NYSE: CVS) and Walgreen (NYSE: WAG) are seen as having better-established businesses with more stable operating performances. Let's take a closer look at Rite Aid to see whether or not it is a good buy compared to the competition.
Declining EPS due to preferred stock redemption
Rite Aid and Walgreen are cautious while CVS raised its estimates
Walgreen also felt the challenging environment in its own business. The company lowered its full-year outlook because of a lower gross profit margin driven by fewer higher-profit new generic drugs and an increase in promotions.
In contrast, CVS is more optimistic about its future. CVS raised its full year 2013 non-GAAP EPS from $3.90-$3.96 per share to a range of $3.94-$3.97 per share, beating the analysts' estimates of $3.96 per share.CVS expects to generate around $4.8 billion to $5.1 billion in free cash flow, driving shareholders value in the long run.
Which is the best buy now?
Walgreen gives investors a much higher dividend yield at 2.20%, but also a much higher payout ratio at 45%. If CVS paid the same percentage of earnings