05-08-2018: CVS Health Corporation (CVS): Aetna a Bridge Too Far?

(WAIT FOR PAGE TO LOAD COMPLETELY BEFORE LINKS WORK.)

Corporate Webpages
Company Profile
Company History
News
Comparison with Peers
Bond Issue
Zenith Index
Financial Statements
Avg. P/E to Current P/E
Financial Ratios
Market Grader
Intrinsic Value (Disc. CashFlow)
Tangible Book Value
Projected Earnings
Research Reports
Analysts' Opinions
Insider Activity
Institutional Activity
Sentiment
Short Interest
Standard & Poor's
Management's Discussion
Channel Potential
MACD Histogram
Intraday Chart
Val Idea
Stock Consultant
Point & Figure Chart
Wall Street Analyzer
Marketspace Chart
Time Series Forecast
Neural Network Prediction
Stock Options
Ultimate Trading Systems
Recommendation

CVS Health Corporation

CVS Healthcare Inc. (CVS) is probably best-known to consumers for its 9,800 retail stores nationwide which resemble in some ways former five and dime stores, but with emphasis on healthcare and personal care products. The company is huge, with $184 billion in revenue, $131 billion in net assets, and over $6 billion in income. Judging from its website, the bulk of revenues come from pharmacy operations. This company is so huge that it was able to acquire the giant Aetna Corporation, parts of which had already been spun off to Lincoln National. Omnicare and Minuteclinic were other examples of firms this huge corporation is gobbling up through acquisitions.

Our experience with pharmacy operations was marred by poor management in that in what resembled a telemarketing operation, five or more robot calls per day reminded us of time to refill prescriptions there when prescriptions were more than a month away from being exhausted. Requests of the pharmacy to stop these annoying calls resulted in an inability to stop them, and a doctor's advice based on his experience to use other pharmacies such as Walgreen's, Rite Aid, or Costco.

CVS has been gobbling up smaller drug store companies, such as Osco and Longs, for quite some time and getting larger and larger. Judging from the stock chart pattern, investors seem to be wondering if acquisition of the giant Aetna Insurance Co. might have been a "bridge too far." The Aetna transaction appears to have added $40 billion in debt and Aetna had been spinning off operations after being somewhat unsuccessful of late. What would make CVS think it could do better?

At any rate, our evaluation of CVS gives it an acceptable Zenith Index indicating a strong balance sheet. Some reviewers disagree. Researchers are marginal to negative in their acceptance of this corporation with recent downgrades, and analysts are more positive but reserved on the Aetna integration.

Institutions seem unperturbed and are strong net acquirers. Dimensional Fund Advisors is among them, which we regard as positive. GMI has severe accounting reservations, involving things like too much goodwill (intangibles) on the balance sheet and negative tangible assets.

Ever since the Aetnal merger, the stock chart for this corporation looks like it fell off a cliff! It is down to half of its previous value a few months back. Looking at average to current p/e ratios, a rare situation develops over relatively stable previous earnings suggesting an investment opportunity on a pullback scare that exceeded rationality. Investors seem to be reluctant to take a chance on a stock with such a poor chart pattern especially when the rest of the stock market has been soaring. However, the industry group as a whole has been weak and CVS is average among them.

Our net assessment is that management got too greedy, and size and dominance in an industry does not necessarily guarantee less risk of a total meltdown. The reasons for this great a meltdown are as yet unclear to us and suggest this may be a buying opportunity in a strong corporation, but perhaps it would be best to wait for some upward momentum to develop in the stock chart pattern before jumping in. Never try to buy at the bottom on a meltdown like this one! There were many former members of the Dow Jones Industrial Averages (largest corporations in America) that can attest to the validity of this warning, i.e. where are they now?

The big question: What is Aetna going to add or subtract to or from this corporation's earnings? We suggest paying close attention to some of the more detailed researcher organization reports contained in this article for the answer to that question. 



[Home]
Corporate Wepages

Trade Mark
01
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19


20
21
22
23
24
25
26
27



[Home]
Company Profile

Profile
Profile



[Home]
Company History
6 7 8 9 10 11 12


[Home]
News

Click Here for News Archives



[Home]
Comparison

Comparison

Groups 1
Groups 2
Groups 3


Companies 1

Similar Companies Performance:

55 56
57 58
59 60


[Home]
Bond Issue

22 23



[Home]
Zenith Index

Under current market conditions, a Zenith Index Score of 1.20 or above is required for a positive rating on this factor. 1.21 -1.30 is considered acceptable, 1.30-1.40 is considered strong and
> 1.40 is considered exceptionally strong. Accounting statements in this section often contain mistakes, especially in earlier years' totals, but data is deemed sufficient for us to give a rating. More accurate financial statements follow in the next section.

CVS Health Corporation (CVS)                              Exchange: NYSE
One CVS Drive
Woonsocket, RI 02895             Sector: Healthcare
United States                    Industry:Health Care Plans

CVS Health Corporation, together with its subsidiaries, provides
integrated pharmacy health care services. It operates through Pharmacy
Services and Retail/LTC segments. The Pharmacy Services segment offers
pharmacy benefit management solutions, such as plan design and
administration, formulary management, Medicare Part D services, mail
order, specialty pharmacy and infusion services, retail pharmacy network
management services, prescription management systems, clinical services,
disease management programs, and medical pharmacy management services.
This segment serves employers, insurance companies, unions, government
employee groups, health plans, Medicare Part D plans, managed Medicaid
plans, plans offered on public and private exchanges, other sponsors of
health benefit plans, and individuals under the CVS Caremark Pharmacy
Services, Caremark, CVS Specialty, AccordantCare, SilverScript,
Wellpartner, NovoLogix, Coram, Navarro Health Services, and ACS Pharmacy
names. As of December 31, 2017, it had 23 retail specialty pharmacy
stores, 18 specialty mail order pharmacies and 4 mail order dispensing
pharmacies, and 83 branches for infusion and enteral services. The
Retail/LTC segment sells prescription drugs, over-the-counter drugs,
beauty products and cosmetics, personal care products, convenience
foods, seasonal merchandise, and greeting cards, as well as offers photo
finishing services. It has 9,803 retail stores in 49 states, the
District of Columbia, Puerto Rico, and Brazil primarily under the CVS
Pharmacy, CVS, CVS Pharmacy y m+ís, Longs Drugs, Navarro Discount
Pharmacy, and Drogaria Onofre names; online retail pharmacy Websites;
and 37 onsite pharmacy stores, long-term care pharmacy operations, and
retail health care clinics. The company was formerly known as CVS
Caremark Corporation and changed its name to CVS Health Corporation in
September 2014. CVS Health Corporation was founded in 1892 and is
headquartered in Woonsocket, Rhode Island.


Last Trade:  62.27                           52-Week Range:  84.00 -  60.14
Employees: 160,000                           Avg.Volume:   8,915,345 Shares

Corporate Governance:
Pillar scores are Audit: 1; Board: 2; Shareholder Rights: 2; Compensation: 10.
         (A lower number means less governance risk.)

EPS:  6.44    Dividend Amount: $2.00                   Yield:  3.00%
             Ex-Dividend Date: Apr 20, 2018    Payout Ratio:  31.01

Key Statistics:

    Trailing P/E:   9.80              Forward P/E (est.):   9.12
                                           Target Price:  87.15

Qrtly Stock Price Growth (yoy): -23.17%               Beta:   0.92
Qrtly S&P Index   Growth (yoy):   5.30%        Short Ratio:   2.57%
    Qrtly Revenue Growth (yoy):   9.60%         Shares Out:  1020000000
   Qrtly Earnings Growth (yoy):   0.00%

          Book Value:  37.17                    Debt/Equity:  71.69%
    Price/Book Value:   1.70        Operating Profit Margin:   5.44%
         Price/Sales:   0.35                  Profit Margin:   3.58%
         Market Cap:  64,142,000,000       Return on Equity:  17.79%
    Enterprise Value:  92,270,000,000      Return on Assets:   6.62%

    Operating Cash Flow:  8,010,000,000
         Free Cash Flow:  6,080,000,000



Annual Income Statement:                          (All numbers in thousands)
  Period Ending                             12/31/2017  12/31/2016  12/31/2015

  Total Revenue                            184,764,992 177,526,000 153,290,000
  Cost of Revenue                          156,220,000 148,668,992 126,762,000
  Gross Profit                              28,545,000  28,857,000  26,528,000

Operating Expenses:
  Research & Development                             0           0           0
  Selling, General & Administrative                  0           0           0
  Non-Recurring Expenses                             0           0           0
  Other Operating Expenses                           0           0           0
  Total Operating Expenses                           0           0           0

Operating Income or Loss                     9,517,000  10,366,000   9,475,000

Income from Continuing Operations:
  Total Other Income/Expenses Net             -208,000    -671,000     -21,000
  Earnings Before Interest & Taxes           9,309,000   9,695,000   9,454,000
  Interest Expense                           1,041,000   1,058,000     838,000
  Income Before Taxes                        8,268,000   8,637,000   8,616,000
  Income Tax Expense                         1,637,000   3,317,000   3,386,000
  Minority Interest                              4,000       4,000       7,000

Net Income from Continuing Op.s              6,631,000   5,320,000   5,230,000

Non-recurring Events:
  Discontinued Operations                       -8,000      -1,000       9,000
  Extraordinary Items                                0           0           0
  Effect of Accounting Changes                       0           0           0
  Other Items                                        0           0           0
  Net Income                                 6,622,000   5,317,000   5,237,000
  Preferred Stock & Other Adjustments                0           0           0

Net Income Avail to Common Shares            6,622,000   5,317,000   5,237,000



Annual Cash Flow Statement:                   (All numbers in thousands)
  Period Ending                         12/31/2017    12/31/2016    12/31/2015

  Net Income                             6,631,000     5,320,000     5,230,000

Operating Activities:
  Depreciation                           2,479,000     2,475,000     2,092,000
  Adjustments to Net Income               -679,000      -268,000       -36,000
  Changes in Accounts Recv'bls             941,000       243,000     1,594,000
  Changes in Liabilities                 1,377,000     2,322,000     3,622,000
  Changes in Investories                   514,000       742,000     1,141,000
  Changes in other Oper'g Acts             338,000         8,000      -357,000

Total Cash Flow f Operations             8,007,000    10,141,000     8,539,000

Investing Activities:
  Capital Exenditures                   -1,918,000    -2,224,000    -2,367,000
  Investments                              240,000       256,000       387,000
  Other Cash Flows fr Investing         -1,254,000      -502,000   -11,440,000

Total Cash Flows from Investing         -2,932,000    -2,470,000   -13,420,000

Financing Activities:
  Dividends Paid                        -2,049,000    -1,840,000    -1,576,000
  Sale of Purchase of Stock             -4,032,000    -4,204,000    -4,639,000
  Net Borrowings                          -598,000      -614,000    11,218,000
  Other Cash Flows fr Financing            -72,000      -103,000   -11,440,000

Total Cash Flows from Financing         -6,751,000    -6,761,000     4,879,000

  Effect of Exchange Rate Chg                1,000         2,000       -20,000

Change in Cash & Cash Equiv.            -1,675,000       912,000       -22,000



Annual Balance Sheets:                              (All Numbers in Thousands)
  Period Ending                          12/31/2017    12/31/2016    12/31/2015
Current Assets:
  Cash & Cash Equivalents                 1,696,000     3,371,000     2,459,000
  Short Term Investments                    111,000        87,000        88,000
  Net Receivables                        13,181,000    12,164,000    11,888,000
  Inventory                              15,296,000    14,760,000    14,001,000
  Other Current Assets                      945,000       660,000       722,000
  Total Current Assets                   31,451,000    30,955,000    29,070,000

  Long-Term Investments                           0             0             0
  Property, Plant & Equipt               10,292,000    10,175,000     9,855,000
  Goodwill                               38,451,000    38,249,000    38,106,000
  Intangible Assets                      13,630,000    13,511,000    13,878,000
  Accumulated Amortization                        0             0             0
  Other Assets                            1,529,000     1,485,000     1,440,000
  Deferred LT Asset Charges                       0             0             0

Total Assets                             95,131,000    94,462,000    92,437,000

Current Liabilities:
  Accounts Payable                       15,472,000    14,883,000    14,319,000
  Current Portion LT Debt                15,176,000    11,367,000     8,850,000
  Other Current Liabilities                       0             0             0
  Total Current Liabilities              30,648,000    26,250,000     23,169,000

  Long Term Debt                         15,472,000    14,883,000    14,319,000
  Other Liabilities                      15,176,000    11,367,000     8,850,000
  Deferred LT Liab. Charges                       0             0             0
  Minority Interest                           4,000         4,000         7,000
  Negative Goodwill                           4,000         4,000         7,000

Total Liabilities                        58,658,000    53,418,000    55,202,000

Stockholder Equity:
  Misc. Options, Warrants                         0             0        39,000
  Redeemable Preferred Stock                      0             0             0
  Preferred Stock                                 0             0             0
  Common Stock                               17,000        17,000        17,000
  Retained Earnings                      43,556,000    38,983,000    35,506,000
  Treasury Stock                        -37,765,000   -33,452,000   -28,886,000
  Capital Surplus                        32,079,000    31,618,000    30,948,000
  Other Stockhohlder Equity                -196,000      -336,000      -389,000
  Total Stockholder Equity               37,691,000    36,830,000    37,196,000

Net Tangible Assets                     -14,390,000   -14,930,000   -14,788,000



CVS Health Corporation (CVS)                [Indices near +3.0, near zero,
                                            or < zero bear special attention.]
P/E Ratio Tests:
P/E Ratio < 28?            2.8571          P/E Ratio > 5?             1.0000
P/E Ratio Vs Growth Rate:  0.0000          Forward P/E Ratio < 28?    3.0000
Price/Sales Ratio < 2.3?   3.0000          Inventory/Sales < 5%?      0.6040
Sales < $1 Billion?        0.0054          Operating Margin < 7.5%?   1.3787

Balance Sheet Tests:
Debt/Equity < 0.40?        0.5580          Long-Term Debt Service:    1.6443
LTD Being Reduced?         3.0000          Short-Term Debt Service:   3.0000
Current Ratio > 2?         0.5131          Working Capital >= 1.5?    1.4812
Leverage Ratio < 20%?      0.2836          Debt/Assets < 1?           3.0000
Quick Ratio > 1?           3.0000          Inventory Turnover > 1?    1.0000
Share Equity Increase:     2.0135          Market Cap.< 1.5 Billion?  0.0234
                                           Intangibles < 3% Assets?   0.0548
Income Tests:
Profit Margin < 7.5%?      0.4773          EPS Annual Growth > 10%?   0.0803
Dividend Yield > 2.0%?     0.6667          EPS 3-yr Growth > 15?      0.1186
Enterprise Value/Revenue   0.3473          EPS Growth Consistent?     2.0000
Enterprise Value/EBITDA:   3.0000          Collection < 45 days?      1.7282
EPS Qrtly Growth > 10%?    0.0000          Gross Pft/Cur. LTD > 1?    1.8809
                                           Borrowing Int. Rate < 6%?  1.2784
Stock Performance Tests:
Volatility > 25%?          1.1362          % Held by Insiders < 5%?   3.0000
Beta > 1.25?               0.7360          % Held by Institut. < 50?  0.5818
50 Da MA > 200 Da MA?     -0.2977          % Held by Institut. > 30?  2.8647
52-Wk Change vs. S&P 500: -2.4135          Short Ratio > 5?           0.5140
Price/Book Value < 3?      1.7907          Short % of Float > 20?     0.1240
Return on Assets > 17%?    0.3894          Average Volume > 100,000?  3.0000

Cash Flow Tests:
Oper. C.F. > Lever'd C.F:  1.3174          Positive Free Cash Flow?   3.0000
Positive Oper. Cash Flow?  3.0000          Price to C.F.Ratio < 14?:  3.0000
                                           Cash Flow / Assets > 10%?  1.8595

CVS    CVS Health Corporation              Overall Zenith Index:      1.3597


[Home]
Financial Statements

Income Statement:

Balance Sheet:

Cash Flow Statement:



[Home]
Average to Current P/E Ratios
              (CVS)     CVS Health Corp.

                               2013    2014    2015    2016    2017

          Annual Earnings:     3.75    3.96    4.63    4.90    6.44
Average Price During Year:    57.09   76.80  101.96   94.27   77.95

                P/E Ratio:    15.22   19.39   22.02   19.24   12.10

 Average 5-Year P/E Ratio  =  17.60
             Current Price =  63.1

Previous 5 Quarter Earnings:   0.92    1.07    1.26    3.22    0.98

           Current Annualized (Last Four Quarters) Earnings =   5.46
                                                           ________
                                 Average PE / Current PE =     1.52
                                                           --------

                                      ...a number above 1.00 is good
                                                1.00 or below is bad


[Home]
Financial Ratios

. . . . . . . . . . . . Lowest to Highest, Compared to Industry



[Home]
Market Grader

900
901 902 903 904 905 906 907 908 909 910



[Home]
Intrinsic Value (DCF)

Intrinsic Value by Discounted Cash Flow Method:

Intrinsic Value



[Home]
Book Value

Tangible Book Value:

Book Value



[Home]
Projected Earnings

Earnings Estimates
Earnings Estimates



[Home]
Research Reports

Click Here for Research Reports



[Home]
Analysts' Opinions

Analysts' Opinion 1
Analysts' Opinion 1
Analysts' Opinion 1
Analysts' Opinion 1
Analysts' Opinion 1
Analysts' Opinion 2



[Home]
Insider Activity

Insiders Chart Insider Trades
Insider Trades
Executive Compensation Executive Compensation



[Home]
Institutional Activity

Institutional Orders to Buy or Sell:

institutions 1
Ownership:

institutions 2


[Home]
Sentiment

sentiment

Zenith uses the "sentiment" score above or below 50 to award a positive or negative point in the Decision Matrix.

sentiment sentiment sentiment



[Home]
Short Interest Ratio

As the short interest rises as a percentage of average daily share volume (Days to Cover), this is considered a measure of negative sentiment. Similarly, a decrease in that percentage is considered positive sentiment.

short interest short interest


[Home]
Standard & Poor's

S&P Stock Report (Requires Adobe Acrobat Reader)



[Home]
Management's Discussion of Results of Operations Excerpts

Click Here for Management's Discussion Excerpts



[Home]
Channeling Potential

 
The summary below includes a value for `Degree,' which refers on a
scale of 1 to 10 the range of a channel in the period under consi-
deration compared to the total range of price movement. It also looks
for the last closing price to be within the channel, otherwise zeroed.
The `Index' is the `Degree' weighted for volatility.  Generally, the
the higher the index, the more suitable is the stock for trading as
a `rolling stock' between channel high and low points.

Results for CVS HEALTH CORP.:
Symbol? CVS
Total Months Available:  25
       Months in Cycle?   4

Months Covered by Periods:  12

Period 1           Period 2          Period 3
   H1      L1        H2      L2        H3      L3
  82.46   74.59     84.00   66.45     83.88   60.14

RANGE   =  84.00  TO   60.14            Close =  62.27
CHANNEL =  82.46  TO   74.59           Degree =   3
Volatility =  12.64%                    Index =   3
Channel Chart



[Home]
MACD Histogram Divergence

The theory is that connecting the two most recent peaks or valleys of the MACD histogram will signal the direction of the next major move.



[Home]
Intraday Chart

2 Days:



[Home]
Val Idea

0 out of 8 favorable, (negative opinion.)

Val Idea


[Home]
Stock Consultant

Stock Consultant Stock Consultant


[Home]
Point & Figure Chart

P & F Chart


[Home]
Wall Street Analyzer







[Home]
Marketspace Chart

Marketspace Chart



[Home]
Time Series Forecast

Time Series 1 Time Series 2


[Home]
Neural Network Prediction

"Neurostock" can only track long trades. Therefore its performance, as tracked by itself on stocks which are consistently falling, may not appear as good as it could if each "sell" signal were a "short sale."

Neural Chart
Heading
Neural Trades Neural Prediction



[Home]
Ultimate Trading Systems

3 out of 3 of the ultimate systems favor a downmove.


System Below:
Short term outlook: Positive: Bright Green, Negative: Bright Red
Long term outlook: Postive: Dark Green, Negative: Dark Red.




[Home]
Recommendation

Decision Weighting Factors
FactorsWeighted Points
News + 1
Comparison - 1
Industry - 1
Bond Issue + 1
Zenith Index + 1
Non-GAAP vs. GAAP Earnings - 1
Cash Flow + 1
Average to Current P/E + 1
Ratios + 1
Market Grader - 1
Intrinsic Value DCF + 1
Tangible Book Value - 1
Projected Earnings + 1
Research Reports - 1
Analysts + 1
Executive Perquisites - 1
Insider Activity - 1
Institutional Activity + 1
Management Reporting + 1
Short Interest - 1
Sentiment - 1
Standard & Poor's + 1
MACD Histogram Divergence + 1
Val Idea - 1
Stock Consultant + 1
Point & Figure - 1
Wall Street Analyzer + 1
Marketspace Chart - 1
Time Series Chart - 1
Neural Network - 1
Stock Options + 1
Ultimate Trading Systems - 1
Total - 1
Place 485 shares of CVS Health Corporation (CVS) on the Active List.