CVS Health (CVS 0.48%) has taken its shareholders on a tumultuous ride over the past five years. While the stock is up around 7% during that time frame, there were times when it was looking as if the pharmacy retailer was in a dire situation, with its financials not looking all that great and serious question marks hovering around its growth prospects.
For the most part, CVS Health has calmed investor fears, as the stock has been rallying since last year. A big reason for that is that its recent earnings numbers have been better. And on May 6, the company will go over and release its first-quarter numbers for 2026. Should you buy the healthcare stock before then?
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How has CVS stock done after reporting earnings in the past?
There's been a lot of negative attention on CVS in recent years because its financial performance hasn't been strong. Rising costs have been weighing on its operations, and the company has failed to meet analyst expectations. That has, at times, led to significant stock losses after earnings, as shown in the chart below.
There have been some big spikes and crashes following earnings in recent years, and that has made the stock a bit of a volatile investment to own of late.
Recently, however, the company received some positive news around Medicare Advantage rates, which will be going up higher than expected in 2027, and that may result in a more encouraging outlook for the business. If the company releases strong financial guidance, that could be what the stock needs to rally higher.
NYSE: CVS
Key Data Points
CVS stock looks cheap heading into earnings
Based on analyst projections, CVS Health still looks fairly cheap, trading at just 11 times its estimated future earnings. That's with analysts likely factoring in a fair bit of bearishness into the business, given persistently high costs in the industry of late. Going up against some soft expectations could increase the odds that the upcoming earnings report won't be much worse than analysts expect, and it may even be better.
At a modest valuation, CVS stock could be an attractive buy right now. As a bonus, it also offers a high yield of 3.4% (the S&P 500 average is only 1.2%). While the stock may remain volatile in the short term, if you're willing to be patient and hold on for the long haul, it could be a great investment to hang on to, given its relatively low price and potential for dividend income.
