What To Expect From CVS Health's Q4 Earnings, Revenue & Comps

Shares of CVS Health (NYSE:CVS) have popped 4% in the last month and jumped 1.16% during regular trading Wednesday. But does this signal that investors expect good things from the pharmacy power’s Q4 financial results that are due out before the opening bell on February 20?

Quick Overview

CVS completed its nearly $70 billion acquisition of Aetna (NYSE:AET) in November 2018 as part of its plan to become a larger healthcare provider. The pharmacy giant is set to have Aetna operate as a stand-alone insurance unit and it will likely prove no easy task to join the two different businesses.

CVS plans to roll out upgraded versions of CVS’ MinuteClinics, among other initiatives as the company works to figure out the best practices for the future. The new firm could end up playing a larger role in a health care environment that might feature more virtual medical checkups and hyper-localized care. CVS’ purchase also helps bolster its reach as Amazon (NASDAQ:AMZN) expands its pharmaceutical business.

Moving on, we can see that CVS stock has outperformed the retail-drug stores market average—which includes Walgreens Boots Alliance (NASDAQ:WBA) and Rite Aid (NYSE:RAD) —over the last five years. Clearly, that isn’t saying much with both CVS and the retail-drug stores market in negative territory, compared to the S&P 500’s 53% surge.

Q4 Outlook & Earnings Trends

CVS is projected to see its fourth-quarter revenues surge 11% from the year-ago period to reach $53.71 billion, based on our current Zacks Consensus Estimate. This would crush last quarter’s 2.4% top-line expansion and come on top of Q4 2017’s 5.3% top-line expansion.

More specifically, our NFM estimates call for CVS’ same-store retail sales to jump 4.69%, which would mark a slowdown compared to Q3’s 6.7% jump. Meanwhile, the company’s pharmacy comps are projected to pop 6.41%. This would also mark a slight decrease from last quarter’s 8.7% same-store pharmacy sales growth.

At the bottom end of the income statement, CVS is projected to see its adjusted quarterly earnings expand by 7.81% to reach $2.07 a share. In the third quarter, the firm’s adjusted EPS figure surged 15.3% and beat our estimate. It is also worth noting that CVS’ earnings estimate revision picture has leaned more heavily to the negative side over the last 60 days.

Bottom Line

CVS is currently a Zacks Rank #3 (Hold) based on its mixed earnings estimate revision activity and sports an “A” grade for Value in our Style Scores system. The company, which is a dividend payer, is scheduled to release its Q4 2018 financial results before the market opens on Wednesday, February 20. So, make sure to come back to Zacks for a full break down of CVS’ actual metrics.

Fellow giant Walmart (NYSE:WMT) reports its Q4 earnings on February 19, with Target (NYSE:TGT) set to release results on March 5.

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