Shares of Walgreens Boots Alliance (WBA -0.66%), Bristol Myers Squibb (BMY 0.03%) and Dominion Energy (D 0.18%) all recently saw 52-week lows.
The drops were not without reason. Walgreens, like other pharmacy stocks, has seen earnings decline as foot traffic in stores has fallen. Pharmaceutical company Bristol Myers Squibb is facing increasing generic competition for its former top-selling oncology drug Relivimid, and has seen revenue decline. Virginia-based utility Dominion Energy had declining earnings in 2022 as demand for electricity fell because of the increasing energy efficiency of appliances and lighting.
However, all three companies are great long-term value stocks with above-average dividends. That means they're on sale right now, with forward price-to-earnings ratios (P/E) of 14 or below, due mostly to short-term macroeconomic conditions. All three deserve second looks.
Walgreens is branching out
Walgreens Boots Alliance is an integrated healthcare, pharmacy, and retail company. Its stock hit a 52-week low on May 23, falling to $30.15 per share.
There are a number of factors that contributed to the stock's decline, including debt stemming from an acquisition spree that included VillageMD and CareCentrix, decreased revenue from COVID-19 vaccinations, and litigation expenses regarding opioid settlements, as well as an ongoing fight with Humana over prescription charges.
In the second quarter, Walgreens reported revenue of $34.9 billion, down 3.3%, year over year. The company's earnings per share (EPS) fell to $0.81, compared to $1.02 in the same quarter a year ago. Looking deeper at the earnings, there are some positive numbers. Walgreens' free cash flow came in at $677 million, a gain of $7 million from the year-ago quarter and a reversal of the $117 million loss in free cash flow it reported in the first quarter.
The company just tightened its belt by laying off 10% of its corporate staff, but none of the 504 who were laid off were located in Walgreens' stores, micro-fulfillment outlets or call centers, a company spokesperson told Reuters.
It may take time, but the company's decision to expand its primary-care offerings through VillageMD and CareCentrix should improve the top and bottom lines. Meanwhile, the company remains profitable and is trading at only eight times earnings. It's a steal at that price.
While you wait for the company's financials to improve, enjoy the dividend, which the company has increased for 47 consecutive years, including a 5% boost last year to $0.48 per quarterly share, delivering a yield slightly above 6%.
Bristol Myers Squibb is a company in transition
Bristol Myers Squibb stock hit a 52-week low on May 23, closing at $65.14 per share. So far this year, the stock is down more than 7%. The company said it pulled in $1.75 billion from its oncology blockbuster Revlimid in the first quarter, a drop of 37% from the prior year due to increased generic competition, which the therapy began facing in the U.S. last spring.
Bristol Myers' first-quarter numbers weren't as bad as they could have been considering lower Revlimid revenue and the effect a higher dollar is having on international sales. The company reported revenue of $11.3 billion, down 3%, but EPS was $1.07, up 81% over the same period last year. The higher EPS was attributed to lower equity investment losses, litigation and other settlement income, and the fact that the company had a debt redemption charge in the same period a year ago.
I think the market is overly penalizing Bristol Myers even though its newer drugs are already making an impact. Bristol's P/E of about 19 is well below the 34 P/E of AbbVie, which is facing revenue losses of its own thanks to generic competition for Humira.
Bristol Myers is still finding growth -- both from its established drugs and its newer ones. Non-small cell lung cancer (NSCLC) therapy Opdivo had revenue of $1.29 billion in the quarter, up 15% year over year. Eliquis, designed to prevent blood clots and strokes in people with atrial fibrillation, had $2.6 billion in sales in the quarter, up 7% over the same quarter last year.
The company has nine new drugs that it has launched over the past two years. In the first quarter, anemia therapy Reblozyl (up 32% year over year) led the way with $209 million in revenue, while multiple myeloma cell therapy Abecma had $147 million in sales, up 119%, and melanoma therapy Opdualag had $117 million in sales, up from $6 million in the first quarter of 2022.
Bristol Myers also has a nice dividend currently yielding around 3.43%, more than double the S&P 500 average dividend yield of 1.66%. The company boosted its quarterly dividend by 5% this year to $0.57 per share, the 14th consecutive year the company has increased its dividend.
Dominion Energy poised to rebound
Dominion Energy is based in Virginia, but the utility company delivers electricity and natural gas to around 7 million customers in 16 states. Dominion's stock hit its 52-week low of $51.69 on May 22, and the shares are down more than 14% so far this year.
While revenue was up by 22.9% to $17.2 billion in 2022, the company's yearly EPS fell 72% to $1.09. That's because the company has spent heavily on renewable energy sources while shifting away from fossil fuels. However, it is a balancing act -- the company is looking to combine more renewables, such as solar and wind power, while keeping the reliability of "on-demand" power that comes from natural gas and other less-green power sources.
Despite that spending, if you look at the company's financials, things are in pretty good order. Dominion's revenue rose 22.7% year over year to $5.25 billion in the first quarter. The company also enjoyed a boost in EPS to $1.17, up 40.7% over the same period last year.
The reason why I think the stock should rise is the company is likely to see improved profit margins beginning this summer thanks to a new Virginia utility regulation bill that passed in April. The final version of the bill directs the State Corporation Commission to increase Dominion Energy's profit margin in the state, boosting the company's authorized return on equity (ROE) from 9.35% to 9.7%.
Dominion stock is also competitively priced if you compare its forward P/E to those of similar-sized and larger utility stocks.
D PE Ratio (Forward) data by YCharts
Like the prior two stocks, Dominion has a solid dividend, but it hasn't raised it since a 6% boost in 2022 to $0.6675. Still, that dividend delivers a yield of around 5.1%, rewarding long-term investors who stay with the stock.
