The stock market has been up quite significantly in the first Quarter of the year and honestly, I made some good deals in past month. So all in all I am happy with my performance and dividend income progress. Nevertheless there are also some companies which went down heavily, one of them is WBA. So let’s have a look if it is worth an investment for the moment.

Overview

Walgreens Boots Alliance, Inc. (WBA), formerly known as Walgreen Company, is the largest drugstore chain in the United States. As of January 31, 2012, the company operates 8,300 stores in all 50 states, and has over 176,000 employees. The company offers consumer goods and services, a pharmacy, and health and wellness services. It offers its products and services through drugstores, through the mail, by telephone and online. WBA was founded in 1901, and is headquartered in Deerfield, IL. Walgreen is largely affected by the use of prescription benefit plans, as a decrease in benefit plans results in a decrease in revenue for Walgreen. As well, Walgreen is affected by the introduction of brand name or generic drugs. New brand name drugs generally result in higher revenues and new generic drugs generally result in an increase in gross profit margins. Walgreen has been paying dividends since 1972, and has increased them annually since 1976. Walgreen is a dividend aristocrat, which means it has been increasing dividends for more than 25 years consecutively. Walgreen pays its dividends quarterly.

Dividend Data

WBA has increased their dividendssince 43 years. This is quite an impressive streak of dividend increases which makes the stock one of the best dividend paying companies. The latest increase was 10% so the company is still able to deliver a very good growth rate.

Dividend: Currently the company pays a yearly dividend of 1.76 USD, which equals a yield of 3.33%. The latest dividend increase was at 10.0%, which is quite above my goal of having a yearly increase of 7.5%.

Payout Ratio: The current payout ratio is at 34.9%, which is on a very good level given the latest increase and the long history of dividend increases.

Stock Price

The share price of WBA is down by almost 22.33% on year to date basis. This fact makes stock look quite cheap at the moment with a price of 52.85 USD.

Valuation

Price/Earning: The current P/E ratio is currently at 9.95, the 5 year average is at 22.36. So based on the P/E ratio the stocks looks really cheap at the moment.

Price/Book: Similar to the P/E ratio, the price/book ratio is also below the 5 year average. The current P/B ratio is at 1.95 compared to its 5 year average of 2.88.

Free cashflow: The company has enough free cashflow to cover the dividend and to increase the dividend in the upcoming years. So the company should definitely not have any cashflow problems in the future.

Debt/Equity: The current debt/equity ratio is at 0.51 which is again on very healthy level, same with the debt level, which is on a constant level.

Growth: For 2019 the median EPS expectations are at 6.24 USD per share and for 2020 at 6.51 USD per share.

The Finbox Fair Value is at 73.32 USD, which means a downside of 38.7%

Conclusion

So having a look at WBA the stock looks really undervalued and the recent downside of the stock price looks like a typical market reaction. Also given their dividend history and growth potential, it is for me a buy at the current prices. WBA has been on my watch list for quite some time and honestly see at the moment a good chance to do a first investment. I guess in the coming days I will purchase around 30 shares.

What do you think about WBA? Is it also on your watch list?