E Portfolio Review - Exiting Walgreens And Removing J&J's Band-Aid


Walgreens Boots Alliance (WBA) reported fourth quarter revenues rose 13% to $34.3 billion with net earnings from continuing operations increasing 6% to $358 million and EPS up 5% to $.41.



For the full fiscal 2021 year, revenues rose 9% to $132.5 billion with earnings from continuing operations and EPS up significantly to $2.0 billion and $2.30, respectively. Return on shareholders’ equity for the year was 8.4%. Free cash flow increased 2% during the year to $4.2 billion with the company paying $1.6 billion in dividends. In line with the company’s long-term capital policy to maintain a strong balance sheet and financial flexibility, Walgreens reduced its leverage by paying down about $6.5 billion in debt during the year.

Walgreens Boots Alliance announced its new consumer-centric healthcare strategy. The plan features the launch of Walgreens Health, a new business segment enabled by investments of $5.2 billion in VillageMD and $330 million in CareCentrix, accelerating the company's capabilities in primary care, post-acute care and home care. The company's new Walgreens Health segment will be in investment mode, which should drive significant future revenue and adjusted operating income growth.

For fiscal 2022, the company anticipates flat adjusted EPS as core growth of 4% is expected to be offset by investments in Walgreens Health. Walgreens expects that over the next three years, adjusted core EPS growth will approximate 4%. As Walgreens restructures its operations once again, we have decided to exit our position and watch from the sidelines.

Even with a healthy dividend, the stock has provided us with a disappointing 3% loss over the years.

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Johnson & Johnson (JNJ) reported third quarter sales increased 11% to $23.3 billion with net earnings up 3% to $3.7 billion and EPS up 3% to $1.37. Adjusted EPS increased 18% to $2.60. This solid performance was driven by robust results across the company’s business units.

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