Walgreen (NASDAQ:WBA) reported fiscal first-quarter earnings this morning, meeting Wall Street's expectations on both the top and bottom line. Revenue was up 5.9% to $18.3 billion, with a 2.4% increase in front-end comparable-store sales at locations open at least one year. Comparable-store prescription sales rose 7.2% as Walgreen gained share in the prescription market.
Net income was up 68% to $695 million, or $0.72 per share. Management was able to lower SG&A expenses to 23.9% of sales from 25.4% a year ago, meaning more revenue flowed to the bottom line.
The good news for the retailer is that prescriptions filled rose 5.8% in the quarter to 213 million, much higher than the 2.9% growth in the industry. That's a strong sign because prescriptions account for 64.7% of sales. It also means the company is taking customers from competitors and drawing them in for front-end purchases as well.
Shares aren't cheap at 16 times this year's estimates, but Walgreen is well positioned to capture a large percentage of the prescription market, as well as front-end sales from the urbanization of the U.S. In the long term, those trends will be great for investors.
Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. 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 Motley Fool has a disclosure policy.