Stock Analysis on Net
Stock Analysis on Net

Walgreens Boots Alliance Inc. (NASDAQ:WBA)

This company has been moved to the archive! The financial data has not been updated since July 9, 2020.

Common-Size Income Statement 

Walgreens Boots Alliance Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014
Sales 100.00 100.00 100.00 100.00 100.00 100.00
Cost of sales -78.03 -76.59 -75.33 -74.54 -73.97 -71.77
Gross profit 21.97% 23.41% 24.67% 25.46% 26.03% 28.23%
Selling, general and administrative expenses -18.44 -18.68 -20.08 -20.37 -21.82 -23.55
Equity earnings in AmerisourceBergen 0.12 0.15 0.11 0.03 0.00 0.00
Equity earnings in Alliance Boots 0.00 0.00 0.00 0.00 0.30 0.81
Operating income 3.65% 4.88% 4.70% 5.11% 4.51% 5.49%
Gain on previously held equity interest 0.00 0.00 0.00 0.00 0.54 0.00
Other income (expense) 0.17 0.13 -0.01 -0.22 0.66 -0.63
Earnings before interest and income tax provision 3.82% 5.01% 4.69% 4.89% 5.72% 4.86%
Interest expense, net -0.51 -0.47 -0.59 -0.51 -0.58 -0.20
Earnings before income tax provision 3.31% 4.54% 4.11% 4.38% 5.13% 4.66%
Income tax provision -0.43 -0.76 -0.64 -0.85 -1.02 -2.00
Post tax earnings from other equity method investments 0.02 0.04 0.01 0.04 0.02 0.00
Net earnings 2.89% 3.82% 3.47% 3.57% 4.14% 2.66%
Net (earnings) loss attributable to noncontrolling interests 0.01 -0.01 -0.02 -0.02 -0.06 -0.13
Net earnings attributable to Walgreens Boots Alliance, Inc. 2.91% 3.82% 3.45% 3.56% 4.08% 2.53%

Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).

Cost of Sales and Gross Profit
The cost of sales as a percentage of sales showed a clear upward trend from -71.77% in 2014 to -78.03% in 2019, indicating increasing costs relative to sales. Correspondingly, gross profit showed a declining trend, decreasing from 28.23% in 2014 to 21.97% in 2019, reflecting squeezed margins over the period.
Selling, General and Administrative Expenses
SG&A expenses consistently decreased as a percentage of sales from -23.55% in 2014 to -18.44% in 2019, suggesting effective cost control or operational efficiencies, which partially offset the adverse impact of rising cost of sales on profitability.
Equity Earnings
Equity earnings in AmerisourceBergen first appeared in 2016 and showed a generally positive but modest contribution, rising from 0.03% to 0.15% by 2018 before declining slightly in 2019. Equity earnings in Alliance Boots were reported only in 2014 and 2015, showing a declining pattern from 0.81% to 0.3%, after which data are missing.
Operating Income
Operating income demonstrated variability, starting at 5.49% in 2014, decreasing to 4.51% in 2015, recovering somewhat to 5.11% in 2016, then gradually declining to 3.65% by 2019. The overall downward trajectory in later years aligns with increased cost of sales outpacing gains in SG&A expense reductions.
Other Income and Expenses
Other income (expense) fluctuated over the years, with negative impact in 2014 (-0.63%) turning positive in subsequent years, reaching 0.17% in 2019. This suggests improved contributions from non-operating activities or better management of other income and expenses.
Earnings Before Interest and Taxes
Earnings before interest and income tax provision peaked at 5.72% in 2015 but showed a declining trend thereafter, falling to 3.82% in 2019, reflecting pressures on operating profitability consistent with trends noted in operating income.
Interest Expense
Net interest expense increased in 2015 to -0.58% before stabilizing around -0.5% in subsequent years, indicating a relatively stable but notable cost of debt service over the period.
Earnings Before Income Tax and Income Tax Provision
Earnings before income tax declined from 4.66% in 2014 to 3.31% in 2019, indicating reduced pre-tax profitability. The income tax provision decreased substantially from -2.00% to -0.43% in 2019, which could reflect changes in tax rates, tax planning strategies, or lower taxable income.
Net Earnings
Net earnings attributable to the company showed volatility with an increase from 2.53% in 2014 to a peak of 4.08% in 2015, followed by fluctuations and a declining trend after 2018, ending at 2.91% in 2019. The decline in the latest year suggests shrinking bottom-line profitability relative to sales.
Net Earnings Attributable to Noncontrolling Interests
The net earnings loss attributable to noncontrolling interests diminished over time, moving from a negative contribution in earlier years towards a neutral or slightly positive contribution in 2019, indicating reduced outside ownership impact on net income.
Overall Analysis
Throughout the 2014-2019 period, the company experienced increasing cost pressures as seen in rising cost of sales, which eroded gross profit margins. While SG&A expenses were well controlled, contributing to some margin relief, the overall profitability metrics such as operating income, EBIT, and net earnings showed a downward trend, especially in the latter years. Equity earnings contributed modestly and inconsistently to profitability. Interest expenses remained stable but present. The reduction in income tax provision as a percentage of sales partially cushioned after-tax earnings. The combination of these factors resulted in net earnings as a percent of sales declining towards the end of the period, underscoring challenges in maintaining profitability amid rising costs and competitive pressures.