What: Global drugstore giant Walgreens Boots Alliance (NASDAQ:WBA) dispensed investors a prosperous July as its stock managed to rise more than 12% during the month, according to data from S&P capital IQ.
So what: The company formerly known as Walgreens reported solid fiscal 2015 third-quarter results during the month that gave investors plenty of reasons to cheer. Revenue came in at $28.8 billion during the quarter, up a staggering 48% from the year-ago period, largely driven by the completion of the acquisition of Alliance Boots in December last year.
Walgreens appears to be digesting its acquisition of Alliance Boots quite well, as it reported net synergies of $504 million through the first nine months of the year, and reaffirmed that it should be able to wring out at least $650 million in costs during the entire fiscal year.
When these costs savings combined with strong same-stores sales growth in the U.S. of 6.3%, adjusted net earnings grew 23% to $1.02 per share, well ahead of the $0.87 that analysts were expecting. These results gave the company confidence to raise its earnings guidance for the year to $3.70 to $3.80 per share, up from its previous prediction of $3.45 to $3.65 a share.
The company also bumped the dividend higher by 6.7%, which now marks the 40th time that the company has raised its dividend in as many years, and officially named Stefano Pessina, who had been serving as an acting CEO since January, as Walgreen's permanent CEO.
Now what: These positive results mixed with the news about a permanent seat in the top chair caused a flurry of analyst activity during the month. Five analysts raised their price target for the shares, sending the stock higher.
Walgreens remains well positioned for the long term as U.S. healthcare reform and an aging global population should combine to create favorable conditions to support reliable growth. When you mix in a small but secure dividend that currently yields 1.5%, it's no wonder that investors are excited about Walgreen's future.
Walgreens is an industry giant with a global footprint and a stable business that investors can sleep well at night owning. Even with the stock trading around 21 times 2016 earnings estimates, I think investors who buy the shares today are poised to do quite well over the long run.