WBA-5-1-19

Subscription: Value Stocks

WBA may produce a high bounce

Walgreens Boots Alliance, Inc. operates through three segments: Retail Pharmacy USA, Retail Pharmacy International and Pharmaceutical Wholesale. The Retail Pharmacy USA segment consists of the Walgreen Co. (Walgreens) business, which includes the operation of retail drugstores, care clinics and providing specialty pharmacy services. The Retail Pharmacy International segment consists primarily of the Alliance Boots pharmacy-led health located in the United Kingdom and beauty stores, optical practices and related contract manufacturing operations. The Pharmaceutical Wholesale segment consists of the Alliance Boots pharmaceutical wholesaling and distribution businesses.

I count the top made by WBA at 97.30 in August 2015 as the top of a large wave ( 3 ) up. Since then WBA has been playing a complex correction shaped as (W)-(X)-(Y). That type of structure is a combination of two A-B-C structures connected by wave ( X ). The wave ( X ) topped at 85.03 in December 2018. Off that top we got a strong decline which I count as wave A down. I see the level 51.50-50.00 as a strong support. From this area we may get a nice corrective rally in wave B up. Once that wave B up tops we may get another decline to a lower low in wave C of ( Y ) of ( 4 ).

WBA - Weekly chart updated on 5/1/2019

On a Daily chart below this drop is structured as a sharp drop withing a declining bullish wedge.

WBA - Daily chart updated on 5/1/2019

Financial Strength

This is a retail company and it has a relatively good Net Margin for that industry. It has a manageable debt load with a total debt less than 2.5 x EBITDA.

The company is relatively inexpensive. Currently it is traded at 11 x Price-to-Free-Cash-Flow. 

Operating Margin

4.3%

Net
Margin

3.3%

Return on Capital

42%

Price-to-Free-Cash-Flow

11

Debt-to-EBITDA

2.34

Dividend
Yield

3.2%