Walgreens Boots Alliance Inc. (NASDAQ:WBA)

The financial ratios of the company over multiple quarters demonstrate notable trends and fluctuations across valuation metrics.

Price to Earnings (P/E) Ratio

The P/E ratio generally showed a downward trend from November 2014 through February 2020, decreasing from around 34.46 to near 10.12. This decline suggests a reduction in market expectations of earnings growth or an increase in earnings relative to price over this period. However, there is a marked spike to 44.42 in May 2020, which could indicate a temporary market reaction or volatility possibly linked to external factors impacting the company or market sentiment at that time.

Price to Operating Profit (P/OP) Ratio

This ratio exhibited a general decline from 16.63 in late 2014 to 8.17 by February 2020, reflecting improved operating profit relative to the company’s share price or a lowered valuation multiple on operating profits. Similar to the P/E ratio, a noticeable increase to 21.95 occurred in May 2020, suggesting a sudden market reassessment of operating profit expectations or related uncertainties.

Price to Sales (P/S) Ratio

The P/S ratio followed a steady decreasing trend throughout the observed periods, moving from 0.93 in late 2014 down to approximately 0.25 by May 2020. This continuous reduction indicates a declining valuation of sales relative to share price, which may reflect market skepticism about sales growth or profitability, or increased competition impacting sales valuations.

Price to Book Value (P/BV) Ratio

The P/BV ratio declined moderately from 3.48 in November 2014 to about 1.49 in February 2020, suggesting that the market value of equity moved closer to the book value over time. This convergence might indicate a reassessment of the company's asset base or a correction in market pricing. An uptick to 1.63 in May 2020 shows a slight rebound, consistent with volatility observed in other valuation multiples during the same period.

Overall, the company experienced a gradual decline in valuation multiples from late 2014 through early 2020, reflecting either improved earnings and profitability metrics or more conservative market valuation expectations. The sharp increases across several ratios in May 2020 suggest an unusual market event or significant change in investor sentiment during that quarter.

The analysis of the quarterly financial data reveals several notable trends related to the share price, earnings per share (EPS), and price-to-earnings (P/E) ratio over the observed periods.

Share Price

The share price experienced fluctuations with an overall downward trend across the time frame. Initially, there was a rise from 76.05 US$ to a peak near 92.62 US$ early in the period, followed by several periods of decline interspersed with moderate recoveries. From late 2017 onward, the share price showed a more pronounced decrease, falling from the 70 US$ range to below 40 US$ near the end of the observed period. This decline indicates increasing market challenges or possibly declining investor confidence over time.

Earnings per Share (EPS)

EPS exhibited a generally positive trend in the earlier segments, increasing from 2.21 US$ to a high of 5.65 US$ around early 2019. This increase suggests improving earnings performance and profitability during this phase. However, a subsequent decline is evident after early 2019, with EPS dropping significantly to 0.88 US$ by mid-2020. This sharp decline could be indicative of operational difficulties, market pressures, or extraordinary events negatively affecting profitability.

P/E Ratio

The P/E ratio corresponded closely with the movements in share price and EPS. Initially, the ratio declined from 34.46 to the low teens, reflecting rising earnings relative to share prices. Around late 2018 to early 2019, the P/E ratio reached its lowest levels, which may indicate the stock being undervalued or EPS peaking relative to price. However, by mid-2020, the P/E ratio surged to 44.42, coinciding with a substantial drop in EPS while the share price decreased less dramatically, resulting in a higher relative valuation. This increase suggests investor expectations or market dynamics that elevated the valuation despite diminishing earnings.

In summary, the period under review shows an early phase of growth in earnings and moderate share price strength followed by a pronounced decline in both share price and earnings per share, culminating in elevated valuation multiples due to earnings contraction. These trends underline potential structural or cyclical challenges impacting the financial performance and market valuation over time.

The share price of the company exhibited a notable upward trend from late 2014 to early 2015, peaking around $92.62. However, subsequent quarters showed a general decline, with prices falling consistently from 2017 onward, reaching a low near $39.01 by mid-2020. This suggests a period of decreasing market valuation over the latter part of the timeframe.

Operating profit per share (OPPS) showed an overall increasing pattern from November 2014 through May 2018, moving from $4.57 to a peak of $6.88. After this peak, OPPS began to decline gradually, with a significant drop to $1.78 by May 2020. This trend indicates initial improvement in operational profitability followed by a notable deterioration in the latest period.

The price-to-operating profit (P/OP) ratio demonstrated significant fluctuations. It was highest in early 2015 at 22.83 and trended downward over the years, reaching low points around 8.4 to 9.96 between 2018 and early 2020, before sharply increasing again to 21.95 by May 2020. The lower ratios during 2018-2020 reflect a market valuation that was relatively low compared to operating profit, but the sudden ratio increase in mid-2020 suggests market price dropped disproportionately compared to operating profit.

Summary of Trends

An initial rise and subsequent long-term decline in share price was observed, particularly accelerating after 2017.

Operating profit per share improved steadily until 2018, indicating enhanced profitability, but declined sharply thereafter.

The P/OP ratio's downward trend through much of the period reflects a decreasing valuation relative to operating profitability, with an abrupt spike in mid-2020 signaling a valuation anomaly likely linked to market or company-specific shocks.

Overall, the periods examined show a transition from growth and improving profitability toward a phase of declining financial performance and market valuation, culminating in intensified volatility at the end of the data range. This pattern warrants further investigation into underlying operational challenges and external factors impacting investor sentiment.

The analysis of the presented financial data reveals several notable trends regarding the share price, sales per share, and the price-to-sales (P/S) ratio over the period from November 2014 through May 2020.

Share Price

The share price exhibited initial growth, rising from $76.05 in November 2014 to a peak of $92.62 in February 2015. Following this peak, the share price generally trended downwards, with intermittent fluctuations. A significant and consistent decline is evident from late 2016 onwards, leading to a low of approximately $39.01 by May 2020. The overall trend suggests diminishing market valuation or investor confidence over the period observed.

Sales per Share

Sales per share demonstrated a steady and consistent upward trajectory throughout the entire period. Starting at $82.08 in November 2014, this metric progressively increased to reach $160.11 by May 2020. This trend indicates sustained revenue growth on a per-share basis, reflecting improved operational performance or expansion in sales volume relative to the number of outstanding shares.

Price-to-Sales (P/S) Ratio

The P/S ratio started at 0.93 in November 2014, increased briefly to 1.19 in February 2015, and thereafter displayed a continuous decline. From mid-2015 onwards, the ratio decreased steadily from values around 0.89 to as low as 0.24 by May 2020. This decline suggests that the market price of the share has not kept pace with the growth in sales per share, potentially indicating undervaluation or market concerns about future growth or profitability.

In summary, while sales per share grew robustly throughout the period, the share price declined and the price-to-sales ratio decreased significantly. This divergence points to a disconnect between operational sales growth and market valuation, potentially signaling market skepticism or external factors influencing investor sentiment during the latter part of the timeline.

The analysis of the quarterly financial metrics reveals several notable trends in the share price, book value per share (BVPS), and the price-to-book value (P/BV) ratio over the examined periods.

Share Price Trends

The share price initially exhibits an upward movement, increasing from $76.05 to a peak near $92.62 within the early quarters. However, following this peak, a gradual decline is observed, with values mostly trending downward over subsequent periods. By the final quarter observed, the share price has dropped to approximately $39.01. This represents a substantial decrease, indicating a bearish trend or a loss of investor confidence during the latter period.

Book Value Per Share (BVPS) Stability

In contrast to the share price, the BVPS maintains relative stability, fluctuating slightly around the $26 to $28 range for most periods. There is no significant upward or downward trend, with occasional minor variations but no drastic changes. This suggests that the company's net asset value per share has remained fairly consistent, implying steady underlying book value despite fluctuations in market valuation.

Price-to-Book Value (P/BV) Ratio Developments

The P/BV ratio demonstrates a declining pattern over time. Starting from a high of approximately 3.48, the ratio steadily decreases across the quarters, reaching a low near 1.49 before showing a minor uptick towards 1.63 at the end. This continuous decline suggests that the market has progressively valued the company closer to its book value rather than at a premium. This could indicate a reduced market optimism or a reassessment of the company's growth prospects and risk profile by investors.

Interrelationship of Metrics

The divergence between the share price and BVPS trends, combined with the lowering P/BV ratio, implies that while the company’s tangible book value remains stable, market valuation has weakened considerably. The decreasing P/BV ratio highlights a shift in investor perception, possibly reflecting concerns regarding future earnings potential or external market challenges impacting valuation multiples.