I read the WBA annual report and it looks like it is in pretty good shape and very cheap.
They have constant “one time” expenses, but even including them, they are making about $5 billion a year in after tax profit. And maybe they will have a year without major “one time” expenses and make more like $7 billion in GAAP profits. Debt is also fairly small and going down each quarter.
They are managing to prune store count while increasing sales and cutting admin costs. Offsetting this is gradually declining margins.
Their biggest competitor is CVS of course. The other one is Rite Aid. They wanted to buy Rite Aid, that fell through, (so did Albertson’s attempt to buy Rite Aid.) Instead WBA purchased 2000 of their locations, leaving 2500 remaining Rite Aids. Rite Aid is doing badly and will probably go bankrupt at the next national recession.
Ultimately healthcare is going to only grow, and I think chain pharmacies are doing a good job evolving. It isn’t a great business, but the earnings are amazing compared to the price and I think will be roughly stable long term with the higher sales/thinner margins trend continuing.
