Foolish investors who follow the retail world should be very interested in Walgreen's (NYSE:WAG) fourth-quarter earnings release on Monday. Through nine months, the company was knocking the cover off the ball, with sales up 14.5% and earnings rising 22.9%. The company is in its fourth consecutive year of growing comparable sales at the front end (non-prescription) by more than 5%. With results like that, it's no wonder Walgreen is on track to open 500 new stores this year.

What the analysts say:

  • Buy, sell, or waffle? Twenty analysts follow Walgreen. Thirteen offer either a buy or strong buy, with seven suggesting a hold.
  • Revenue. On average, the analysts are looking for 11% sales growth to $13.5 billion.
  • Earnings. Net earnings of $0.47 per share are expected, up 17.5% compared with last year. The range on this estimate is $0.46 to $0.50.

What management says:
News from the company has been bubbly of late. Chairman Jeffrey A. Rein waxed lyrical in June over the first batch of 78 million baby boomers turning 65 in 2011. Those boomers are going to need a lot of prescription drugs, so Walgreen is gearing up to have more than 7,000 stores humming by 2010. 

Management is also excited about the acquisition of convenient-care clinic operator (say that five times fast) Take Care Health Systems. This acquisition is intended to be the core for expansion to more than 400 convenient-care clinics by December 2008. 

On the other hand
Just last Wednesday, a JPMorgan analyst upgraded CVS Caremark (NYSE:CVS) to overweight and downgraded Walgreen to neutral. The rationale is that CVS has a "more sophisticated" health-care offering since its acquisition of Caremark, and with its Minute Clinic in-store clinics. And to stir the pot up more, Rite Aid (NYSE:RAD) reported second-quarter results that looked a little peaked, and Wal-Mart (NYSE:WMT) boasts its $4 generic prescription program and recently announced it will be expanding that program by 10%.

Clearly the competition for prescriptions, convenient care, and all the ancillary merchandise and services that go along with them is heating up big-time. Who will be the winner in this huge market? On Monday, we'll get another dose of Walgreen's performance to help see where the company stands against competitors.

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