How Smart Investors Look at CVS Health (CVS).

CVS Health logged a -0.0% change during today's afternoon session, and is now trading at a price of $69.05 per share.

CVS Health returned losses of -27.0% last year, with its stock price reaching a high of $104.83 and a low of $64.62. Over the same period, the stock underperformed the S&P 500 index by -39.0%. As of April 2023, the company's 50-day average price was $69.56. CVS Health Corporation provides health services in the United States. Based in Woonsocket, RI, the large-cap Consumer Staples company has 219,000 full time employees. CVS Health has offered a 3.3% dividend yield over the last 12 months.

The Business Runs With Healthy Debt Levels:

2017-02-09 2018-02-14 2019-02-28 2020-02-18 2021-02-16 2022-02-09
Revenue (MM) $177,546 $184,786 $194,579 $256,776 $268,706 $292,111
Gross Margins 16.0% 15.0% 16.0% 18.0% 18.0% 18.0%
Operating Margins 6% 5% 5% 5% 5% 5%
Net Margins 3.0% 4.0% 0.0% 3.0% 3.0% 3.0%
Net Income (MM) $5,317 $6,622 -$594 $6,634 $7,179 $7,910
Net Interest Expense (MM) -$1,078 -$1,062 -$2,619 -$3,035 -$2,907 -$2,503
Earnings Per Share $4.93 $6.47 -$0.57 $5.08 $5.46 $5.95
EPS Growth n/a 31.24% -108.81% 991.23% 7.48% 8.97%
Diluted Shares (MM) 1,079 1,024 1,044 1,305 1,314 1,329
Free Cash Flow (MM) $12,365 $9,925 $10,070 $15,305 $18,302 $20,785
Capital Expenditures (MM) -$2,224 -$1,918 -$1,205 -$2,457 -$2,437 -$2,520
Net Current Assets (MM) -$26,586 -$26,207 -$92,670 -$107,977 -$104,645 -$97,610
Long Term Debt (MM) $25,615 $22,181 $71,444 $64,699 $59,207 $51,971

CVS Health has a pattern of improving cash flows and healthy debt levels. Additionally, the company's financial statements display average operating margins with a stable trend and positive EPS growth. However, the firm has slimmer gross margins than its peers. Finally, we note that CVS Health has weak revenue growth and a flat capital expenditure trend.

Trades Below Its Graham Number but Has an Elevated P/E Ratio:

CVS Health has a trailing twelve month P/E ratio of 31.8, compared to an average of 24.36 for the Consumer Staples sector. Based on its EPS guidance of $8.6, the company has a forward P/E ratio of 8.1. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 3.2%. On this basis, the company's PEG ratio is 9.98, which suggests that it is overpriced. In contrast, the market is likely undervaluing CVS Health in terms of its equity because its P/B ratio is 1.22 while the sector average is 4.29. The company's shares are currently trading -20.8% below their Graham number. In conclusion, CVS Health's impressive cash flow trend, decent P/B ratio, and reasonable use of leverage demonstrate that the company may still be fairly valued — despite its elevated earnings multiple.

CVS Health Has an Analyst Consensus of Strong Upside Potential:

The 22 analysts following CVS Health have set target prices ranging from $76.0 to $110.0 per share, for an average of $90.16 with a buy rating. As of April 2023, the company is trading -22.8% away from its average target price, indicating that there is an analyst consensus of strong upside potential.

CVS Health has a very low short interest because 1.1% of the company's shares are sold short. Institutions own 79.9% of the company's shares, and the insider ownership rate stands at 0.18%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 9% stake in the company is worth $8,055,955,104.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.