Analyzing Walgreens Boots Alliance (WBA) and Cardinal Health (CAH)
Walgreens Boots Alliance (NASDAQ: WBA) and Cardinal Health (NYSE:CAH) are both large-cap non-cyclical consumer goods & services companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, valuation, risk, earnings, institutional ownership and dividends.
Risk & Volatility
Walgreens Boots Alliance has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500. Comparatively, Cardinal Health has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500.
Insider & Institutional Ownership
60.2% of Walgreens Boots Alliance shares are owned by institutional investors. Comparatively, 88.5% of Cardinal Health shares are owned by institutional investors. 14.8% of Walgreens Boots Alliance shares are owned by insiders. Comparatively, 1.0% of Cardinal Health shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
This is a breakdown of recent ratings and price targets for Walgreens Boots Alliance and Cardinal Health, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Walgreens Boots Alliance||0||8||12||0||2.60|
Walgreens Boots Alliance presently has a consensus price target of $85.94, indicating a potential upside of 20.12%. Cardinal Health has a consensus price target of $73.30, indicating a potential upside of 24.47%. Given Cardinal Health’s higher probable upside, analysts plainly believe Cardinal Health is more favorable than Walgreens Boots Alliance.
This table compares Walgreens Boots Alliance and Cardinal Health’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Walgreens Boots Alliance||3.45%||18.36%||7.73%|
Valuation & Earnings
This table compares Walgreens Boots Alliance and Cardinal Health’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Walgreens Boots Alliance||$118.21 billion||0.60||$4.08 billion||$3.78||18.93|
|Cardinal Health||$129.98 billion||0.14||$1.29 billion||$3.44||17.12|
Walgreens Boots Alliance has higher earnings, but lower revenue than Cardinal Health. Cardinal Health is trading at a lower price-to-earnings ratio than Walgreens Boots Alliance, indicating that it is currently the more affordable of the two stocks.
Walgreens Boots Alliance pays an annual dividend of $1.60 per share and has a dividend yield of 2.2%. Cardinal Health pays an annual dividend of $1.85 per share and has a dividend yield of 3.1%. Walgreens Boots Alliance pays out 42.3% of its earnings in the form of a dividend. Cardinal Health pays out 53.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cardinal Health has raised its dividend for 12 consecutive years. Cardinal Health is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Walgreens Boots Alliance beats Cardinal Health on 11 of the 17 factors compared between the two stocks.
Walgreens Boots Alliance Company Profile
Walgreens Boots Alliance, Inc. (Walgreens Boots Alliance) is a holding company. The Company is a global pharmacy-led, health and wellbeing enterprise. Walgreens Boots Alliance operates through three divisions, including Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. The Company’s products are marketed under a number of brands, which include No7, the Botanics range, Almus (generic medicines), Boots Pharmaceuticals and Soap & Glory (bathing and beauty brand). In addition, the Company has investments in Guangzhou Pharmaceuticals Corporation and Nanjing Pharmaceutical Company Limited. The Company operates in around 25 countries, which include the wholesale and distribution network with over 340 distribution centers and more than 180,000 pharmacies, health centers and hospitals in 19 countries.
Cardinal Health Company Profile
Cardinal Health, Inc. is a healthcare services and products company. The Company operates through two segments: Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare and consumer products. This segment also operates nuclear pharmacies and cyclotron facilities; provides pharmacy management services to hospitals, as well as medication therapy management and patient outcomes services to hospitals, other healthcare providers and payers, and provides services to healthcare companies. The Medical segment distributes a range of medical, surgical and laboratory products, and provides services to hospitals, ambulatory surgery centers, clinical laboratories and other healthcare providers. This segment also manufactures, sources and develops its own Cardinal Health brand medical and surgical products. It provides post-acute care management and transition services, and software to hospitals.
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