Should I Buy Walgreens (WBA)? Finance YouTuber Analysis

The YouTuber sees an opportunity in Walgreens Boots Alliance, arguing it is significantly undervalued compared to CVS Health, trading at a 40% discount on an enterprise value to sales basis. The company's strategic moves like closing unprofitable stores and selling non-core assets are classic preparations for a private equity sale, which could lead to a near-term price pop despite its debt.

“Walgreens boots Alliance sticker WBA got good news last week even if the market didn't realize it.”

The YouTuber is watching WBA due to reported talks of a sale to a private equity firm, Sycamore Partners, after the company sold assets to pay down debt. He estimates a potential price of $12.50 to $15 per share, acknowledging the risk from $33 billion in debt but seeing upside potential.

“at even a multiple of3 times Enterprise Value to revenue the company should fetch at least between $1250 and $15 a share”

The YouTuber suggests buying Walgreens due to its potential as a takeover target. He argues that private equity firms might offer a premium on its current valuation, potentially reaching $12.50 to $15 per share, based on an enterprise-to-revenue multiple comparable to CVS, especially given Walgreens' efforts to reduce debt.

“if we take a 35 times Enterprise to revenue valuation that would mean an offer of about 51 billion for the company or we around $17 billion after debt and a $20 share price I'm not sure they get anywhere near that but could easily get an offer from $1250 to $15 a share for the company when that is finally announced”

The YouTuber is holding WBA despite its disappointing performance, acknowledging industry-wide problems. They believe management needs to make tough decisions like selling the Boots Pharmacy chain to pay down debt. At a 'fire sale valuation' of six times P/E and less than three times EV/revenue, and being cash flow positive, they are willing to give it more time, expecting shares to potentially double or triple within a year or two if it can navigate its challenges.

“so at that fire cell valuation I'm willing to hold on to the stock and give it a little bit more time because if it can press through shares could be worth two or three times the current price within a year or two”

The analyst suggests buying Walgreens Boots Alliance, noting its current 'fire sale' valuation at six times PE and a manageable financial situation with $700 million in balance sheet cash. News of a sale of its Boots segment or another strategic plan could send the stock up to $20 a share, making it an attractive opportunity.

“news of a sale of the boot segment or or any other plan could send the stock back up to $20 a share”

The YouTuber suggests Walgreens Boots Alliance as a buy, trading at half its long-term valuation. He points to several catalysts, including the offloading of pension debt, selling non-core assets, and the potential for a sale of the entire company or a leveraged buyout, which could significantly boost its value.

“Walgreens has the near-term Catalyst to send it higher Shares are down 49% over the last year and trade for just .11 times at sales half the. 23 times Revenue the stock was trading at less than a year ago”

The YouTuber is holding WBA, having bought shares based on research pointing to a potential sale or private equity buyout. The company is strategically offloading non-core assets and reducing debt, which are classic moves to prepare for a sale. Despite a dividend cut, the YouTuber believes the company could receive an offer of $30 or more per share in a bid to go private.

“I started buying shares of Walgreens boots Alliance took her WBA last November on Research that pointed to a sale of the company.”

The analyst sees Walgreens Boots Alliance as a good turnaround investment, noting its recent 10% rise since October and ongoing sales of business segments. There's speculation the entire company could be for sale, indicating potential value.

“Stocks in the consumer staples like Dollar General ticker DG and Walgreens boots Alliance WBA are primed for a rebound could be good Investments on that turnaround in fact WBA is already up 10% since highlighting it in October they are announcing a lot of sales of part segments of their business I think this whole company could be for sale pretty soon”

The YouTuber bought more shares of Walgreens Boots Alliance after its dividend cut, viewing it as a classic move to shore up cash flow and make the company more attractive to a buyer. He notes the stock is trading at a significant discount on an Enterprise Value to revenue basis compared to competitors and its own historical levels, making it a 'private equity wet dream' with potential for restructuring and recapitalization.

“I picked up more shares when the stock opened 10% lower and expect we see a $30 each on any private Equity or a merger offer”

The analyst sees Walgreens as an attractive play due to its low valuation at 7 times next year's expected earnings and 0.4 times enterprise-to-revenue. The company's planned separation from Boots is expected to help pay down its significant debt, and its operating margin of 5.4% is superior to competitor CVS.

“the shares still trade at an attractive valuation though at 7 times next year's expected earnings $3.7 a share or4 times on an Enterprise to revenue basis”

The analyst recommends Walgreens Boots Alliance, citing its recent transfer of the Boots Pension Plan liability, which clears the way for a potential sale of the Boots franchise. This sale could generate up to $6 billion to pay down debt and buy back shares, positioning Walgreens as a top two market share company with strong healthcare and pharmacy revenue, fitting the Boomer spending theme.

“The retail pharmacy leader has just transferred the liability for its boots Pension Plan clearing the way to sell the franchise and turn this stock around Walgreens tried selling boots previously but ran into trouble with that pension liability now with that transfer it could stand to collect as much as $6 billion to pay down debt and buy back its shares”

The analyst believes Walgreens Boots Alliance (WBA) is a buy due to potential catalysts from the sale of its Boots chain, which could generate $6.5 billion. This cash infusion would allow WBA to pay down debt and execute a significant share buyback, improving its financial health and potentially leading to a multiple expansion closer to competitors like CVS. The transfer of the Boots pension liability makes the sale more likely.

“I'm going to highlight that news and why it could mean a 40% bounce in the shares as as well as safety in the dividend”

Despite Walgreens being the highest-yielding dividend champion, the YouTuber advises against buying due to significant concerns. These include massive store closures, runaway losses from theft, and intense competition. The YouTuber notes a 50/50 chance of the company selling itself or filing for bankruptcy, making it an unattractive investment.

“Walgreens is the highest yielding dividend Champion with a 7.6 yield but not quite ready to recommend the shares with massive store closures runaway losses on theft and competition can are about 50 50 that the company sells itself or files bankruptcy”

The YouTuber advises investors to continue avoiding Walgreens, labeling it a 'value trap.' He argues that Amazon's existence makes Walgreens an unattractive investment, as Amazon performs all of Walgreens' functions more efficiently and profitably, including pharmacy services. He sees no potential for a turnaround for Walgreens as Amazon continues to grow.

“Walgreens has been a disastrous investment it's been a value trap and a company that I think investors should continue to avoid Walgreens is now saying that they're going to close a substantial number of poorly performing stores and pulling back on the company's plunge into the primary care business you know I could go into Walgreens and go over all their troubles and concerns and woes this company faces but it's really simple why invest in Walgreens when Amazon exists I would never invest in a company like Walgreens so long as Amazon exists Amazon basically does every single thing that Walgreens does except they do it better and more efficiently they do it with a better customer base they do it more profitably Amazon is a destroyer of Walgreens Amazon sells almost everything Walgreens sells except for grocery and Walgreens doesn't sell a lot of grocery Amazon is also in Pharmacy which is another major part of Walgreens I don't believe there will be any turnaround for Walgreens this company is going to continue to struggle as Amazon grows”

The analyst advises avoiding Walgreens due to structural problems in its pharmacy business, declining margins, stagnating sales, and significant opioid-related liabilities. Despite a seemingly low valuation and high dividend yield, the dividend is considered unsafe and likely to be cut or eliminated, which would further depress the stock price. A turnaround is expected to be long and costly.

“ich gehe davon aus dass der Aktienkurs lange Durststrecke haben wird und interessant ist wir haben im letzten Jahr schon Aktienanalyse gemacht das war im Juli 2022 also vor allem eine Vierteljahr und der david hat damals schon weil auch damals und work wie ins günstig erschienen mit einer Dividenden von 5 % von damals ist Allzeithoch und David kann damals auch schon zum Schluss da ist ein Turnaround er anhand der karatal nicht erkennen kann und ihn hat damals auch schon die Aktie nicht überzeugt also fern geblieben hat sich bezahl gemacht durch nicht erlittene Verluste ich bin auch persönlich der Meinung wir haben momentan wirklich viele interessante Dividendenaktien im Angebot und wer auch kaufenswerten Aktien schaut kann sich diese Liste mal angucken der 100 kaufenswert eine Aktien das sind viele gute Dividendenzahler dabei wir haben auch hier dann beispielsweise Dividendenaktien mit Rabatt sogar eine Serie im kaufenswerte Aktien mit sehr als Serie und ich gehe mal hier Dividenden Aktien mit Rabatt als Serie erscheint alles jeden Monat und da analysieren wir in jedem Artikel der erscheint zumindest drei Aktien geben wieder so eine Art Liste aus und die Bestenliste für Inspiration also ich denke da ist wirklich genügend da worauf wir stützen könnt und was ein besseres Risiko chancenpotenzial hat als workweens ist aber nur meine persönliche Meinung schreibt gerne in die Kommentare rein was du von der Queens Aktie hältst vielleicht habe ich auch irgendwas übersehen was für dich wesentlich ist da wäre ich natürlich ver Hinweise inklusive der Community auch während wir Hinweise dann dankbar ansonsten sage ich jetzt mal Danke schön fürs zuschauen und bis zum nächsten Video ciao”

The stock appears significantly undervalued based on historical metrics, trading well below its fair value. The current low valuation is attributed to increased competition, particularly from online retailers, and challenges in adapting its business model. The YouTuber suggests buying if one believes management can successfully address these competitive pressures and strategic issues.

“und werden zur überzeugung kommt die die kriegen das schon kriegen das kind schon geschaukelt auf die eine oder andere weise dann ist die aktie tatsächlich werden dann könnte man die aktie kaufen”

The analyst strongly advises against buying Walgreens (WBA) due to its declining EBITDA, high leverage (7x debt to EBITDA), and weak free cash flow. He argues the stock is overvalued at its current 15x earnings multiple, suggesting a fair value closer to 9-10x earnings, which would imply a significantly lower share price. The company's share buybacks are seen as an illusion to mask contracting business fundamentals.

“this stock is not that stock and it's highly highly overvalued so let me let me do this let's review the five key attributes number one top line revenue growth it is growing number two ebitda earnings are not growing number three strong free cash flow is not there number four over leveraged yes it debt is too high it's not there number five well priced no it is not I'm gonna go ahead and give this a bad rating”