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Linked here is a detailed quantitative analysis of Walgreens Boots Alliance, Inc. (WBA). Below are some highlights from the above linked analysis:

Company Description: Walgreens Boots Alliance, Inc. is the largest U.S. retail drug chain in terms of revenues, this company operates more than 8,000 drug stores throughout the U.S. and Puerto Rico.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

WBA is trading at a discount to only 3.) above. Since WBA's tangible book value is not meaningful, a Graham number can not be calculated. When also considering the NPV MMA Differential, the stock is trading at a 346.8% premium to its calculated fair value of $3.85. WBA did not earn any Stars in this section.

Dividend Analytical Data: In this section, there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growthhttps://www.dividend-growth-stocks.com/2024/05/air-products-and-chemicals-inc-apd.html
6. Rolling 4-yr Div. > 15%

WBA earned no Stars in this section. The company has paid a cash dividend to shareholders every year since 1933 and has increased its dividend payments for 0 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

The NPV MMA Diff. of the $638 is below the $3,500 target I look for in a stock that has increased dividends as long as WBA has. The stock's current yield of 5.82% exceeds the 3.75% estimated 20-year average MMA rate.

Peers: The company's peer group includes: CVS Caremark Corporation (CVS) with a 3.5% yield, Rite Aid Corp. (RAD) with a 0.0% yield, and Walmart Stores Inc. (WMT) with a 1.5% yield.

Conclusion: WBA did not earn any Stars in the Fair Value section, did not earn any Stars in the Dividend Analytical Data section, and did not earn any Stars in the Dividend Income vs. MMA section for a total of zero Star. This quantitatively ranks WBA as a 0-Star Avoid stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $0.95 before WBA's NPV MMA Differential decreased to the $3,500 minimum that I look for in a stock with no years of consecutive dividend increases. At that price, the stock would yield 108.2%. Needless to say, the dividen cut has destroyed the value of this stock.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is n/a%. This dividend growth rate is below the -47.9% used in this analysis, thus providing no margin of safety. WBA has a risk rating of 2.5 which classifies it as a High risk stock. Without a meaningful dividend increase this year, WBA will be removed from my database.

WBA offers unmatched convenience with one of the most recognized brand names in the retail pharmacy business. The company enjoys a strong market share within the relatively stable U.S. retail drug industry. Competitors such as Wal-Mart and CVS continue to put pressure on WBA's market share. The stock is trading above my $3.85 calculated fair value and its yield of around 5.2% is historically attractive. This is a stock I will be watching for removal from my database.

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