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CVS Health (CVS) Gains As Market Dips: What You Should Know

Zacks Equity Research
·3 min read

CVS Health (CVS) closed at $75.05 in the latest trading session, marking a +0.17% move from the prior day. This move outpaced the S&P 500's daily loss of 0.38%. At the same time, the Dow lost 0.22%, and the tech-heavy Nasdaq lost 0.12%.

Prior to today's trading, shares of the drugstore chain and pharmacy benefits manager had gained 8.08% over the past month. This has outpaced the Retail-Wholesale sector's gain of 0.45% and the S&P 500's gain of 4.12% in that time.

Wall Street will be looking for positivity from CVS as it approaches its next earnings report date. On that day, CVS is projected to report earnings of $1.24 per share, which would represent a year-over-year decline of 28.32%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $68.48 billion, up 2.38% from the year-ago period.

It is also important to note the recent changes to analyst estimates for CVS. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.18% higher within the past month. CVS is holding a Zacks Rank of #2 (Buy) right now.

Valuation is also important, so investors should note that CVS has a Forward P/E ratio of 9.95 right now. This valuation marks a discount compared to its industry's average Forward P/E of 11.42.

Investors should also note that CVS has a PEG ratio of 1.69 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Retail - Pharmacies and Drug Stores stocks are, on average, holding a PEG ratio of 1.74 based on yesterday's closing prices.

The Retail - Pharmacies and Drug Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 20, which puts it in the top 8% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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