CVS Health Corporation (NYSE: CVS) and Walgreens Boots Alliance (NASDAQ:WBA) are both large-cap drug retailers – nec companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, earnings, valuation, institutional ownership, profitability, risk and analyst recommendations.

Institutional and Insider Ownership

82.0% of CVS Health Corporation shares are held by institutional investors. Comparatively, 63.6% of Walgreens Boots Alliance shares are held by institutional investors. 0.6% of CVS Health Corporation shares are held by insiders. Comparatively, 13.5% of Walgreens Boots Alliance shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

CVS Health Corporation has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500. Comparatively, Walgreens Boots Alliance has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for CVS Health Corporation and Walgreens Boots Alliance, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CVS Health Corporation 0 7 12 0 2.63
Walgreens Boots Alliance 0 7 13 0 2.65

CVS Health Corporation currently has a consensus price target of $85.51, indicating a potential upside of 21.71%. Walgreens Boots Alliance has a consensus price target of $87.17, indicating a potential upside of 21.79%. Given Walgreens Boots Alliance’s stronger consensus rating and higher possible upside, analysts plainly believe Walgreens Boots Alliance is more favorable than CVS Health Corporation.

Profitability

This table compares CVS Health Corporation and Walgreens Boots Alliance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CVS Health Corporation 2.77% 16.96% 6.36%
Walgreens Boots Alliance 3.45% 18.36% 7.73%

Dividends

CVS Health Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 2.8%. Walgreens Boots Alliance pays an annual dividend of $1.60 per share and has a dividend yield of 2.2%. CVS Health Corporation pays out 41.3% of its earnings in the form of a dividend. Walgreens Boots Alliance pays out 42.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Walgreens Boots Alliance has increased its dividend for 9 consecutive years. CVS Health Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares CVS Health Corporation and Walgreens Boots Alliance’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
CVS Health Corporation $177.53 billion 0.40 $5.32 billion $4.84 14.52
Walgreens Boots Alliance $118.21 billion 0.61 $4.08 billion $3.78 18.93

CVS Health Corporation has higher revenue and earnings than Walgreens Boots Alliance. CVS Health Corporation is trading at a lower price-to-earnings ratio than Walgreens Boots Alliance, indicating that it is currently the more affordable of the two stocks.

Summary

Walgreens Boots Alliance beats CVS Health Corporation on 11 of the 17 factors compared between the two stocks.

CVS Health Corporation Company Profile

CVS Health Corporation, together with its subsidiaries, is an integrated pharmacy healthcare company. The Company provides pharmacy care for the senior community through Omnicare, Inc. (Omnicare) and Omnicare’s long-term care (LTC) operations, which include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. It operates through three segments: Pharmacy Services, Retail/LTC and Corporate. The Pharmacy Services Segment provides a range of pharmacy benefit management (PBM) solutions to its clients. As of December 31, 2016, the Retail/LTC Segment included 9,709 retail locations (of which 7,980 were its stores that operated a pharmacy and 1,674 were its pharmacies located within Target Corporation (Target) stores), its online retail pharmacy Websites, CVS.com, Navarro.com and Onofre.com.br, 38 onsite pharmacy stores, its long-term care pharmacy operations and its retail healthcare clinics.

Walgreens Boots Alliance Company Profile

Walgreens Boots Alliance, Inc. (Walgreens Boots Alliance) is a holding company. The Company is a global pharmacy-led, health and wellbeing enterprise. Walgreens Boots Alliance operates through three divisions, including Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. The Company’s products are marketed under a number of brands, which include No7, the Botanics range, Almus (generic medicines), Boots Pharmaceuticals and Soap & Glory (bathing and beauty brand). In addition, the Company has investments in Guangzhou Pharmaceuticals Corporation and Nanjing Pharmaceutical Company Limited. The Company operates in around 25 countries, which include the wholesale and distribution network with over 340 distribution centers and more than 180,000 pharmacies, health centers and hospitals in 19 countries.

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