We assign a fundamental rating of 4 out of 10 to CVS. CVS was compared to 103 industry peers in the Health Care Providers & Services industry. CVS may be in some trouble as it scores bad on both profitability and health. CVS has a correct valuation and a medium growth rate. Finally CVS also has an excellent dividend rating.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year CVS was profitable.
CVS had a positive operating cash flow in the past year.
In the past 5 years CVS has always been profitable.
In the past 5 years CVS always reported a positive cash flow from operatings.

1.2 Ratios

The Return On Assets of CVS (0.18%) is comparable to the rest of the industry.
CVS's Return On Equity of 0.64% is in line compared to the rest of the industry. CVS outperforms 54.37% of its industry peers.
The Return On Invested Capital of CVS (4.90%) is comparable to the rest of the industry.
Measured over the past 3 years, the Average Return On Invested Capital for CVS is below the industry average of 9.21%.

		Industry Rank	Sector Rank
ROA	0.18%
ROE	0.64%
ROIC	4.9%

ROA(3y)2.35%

ROA(5y)2.72%

ROE(3y)7.68%

ROE(5y)8.81%

ROIC(3y)6.22%

ROIC(5y)6.35%

1.3 Margins

CVS has a Profit Margin (0.12%) which is in line with its industry peers.
In the last couple of years the Profit Margin of CVS has declined.
The Operating Margin of CVS (2.73%) is comparable to the rest of the industry.
CVS's Operating Margin has declined in the last couple of years.
CVS has a Gross Margin of 13.88%. This is in the lower half of the industry: CVS underperforms 66.99% of its industry peers.
CVS's Gross Margin has declined in the last couple of years.

		Industry Rank	Sector Rank
OM	2.73%
PM (TTM)	0.12%
GM	13.88%

OM growth 3Y-19.77%

OM growth 5Y-11.12%

PM growth 3Y-23.26%

PM growth 5Y-13.69%

GM growth 3Y-8.24%

GM growth 5Y-4.91%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so CVS is destroying value.
CVS has less shares outstanding than it did 1 year ago.
CVS has less shares outstanding than it did 5 years ago.
CVS has a worse debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 2.28 indicates that CVS is not a great score, but indicates only limited risk for bankruptcy at the moment.
CVS has a Altman-Z score of 2.28. This is comparable to the rest of the industry: CVS outperforms 49.51% of its industry peers.
The Debt to FCF ratio of CVS is 10.46, which is on the high side as it means it would take CVS, 10.46 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 10.46, CVS is in line with its industry, outperforming 44.66% of the companies in the same industry.
A Debt/Equity ratio of 0.85 indicates that CVS is somewhat dependend on debt financing.
CVS's Debt to Equity ratio of 0.85 is in line compared to the rest of the industry. CVS outperforms 46.60% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.85
Debt/FCF	10.46
Altman-Z	2.28

ROIC/WACC0.6

WACC8.14%

2.3 Liquidity

A Current Ratio of 0.83 indicates that CVS may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.83, CVS is doing worse than 81.55% of the companies in the same industry.
CVS has a Quick Ratio of 0.83. This is a bad value and indicates that CVS is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.63, CVS is not doing good in the industry: 80.58% of the companies in the same industry are doing better.

		Industry Rank	Sector Rank
Current Ratio	0.83
Quick Ratio	0.63

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has been growing slightly by 7.87% over the past year.
Measured over the past years, CVS shows a decrease in Earnings Per Share. The EPS has been decreasing by -5.20% on average per year.
The Revenue has been growing slightly by 6.82% in the past year.
The Revenue has been growing slightly by 7.74% on average over the past years.

EPS 1Y (TTM)7.87%

EPS 3Y-13.62%

EPS 5Y-5.2%

EPS Q2Q%46.79%

Revenue 1Y (TTM)6.82%

Revenue growth 3Y8.47%

Revenue growth 5Y7.74%

Sales Q2Q%7.8%

3.2 Future

Based on estimates for the next years, CVS will show a quite strong growth in Earnings Per Share. The EPS will grow by 13.81% on average per year.
CVS is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 4.65% yearly.

EPS Next Y23.97%

EPS Next 2Y15.58%

EPS Next 3Y15.17%

EPS Next 5Y13.81%

Revenue Next Year7.59%

Revenue Next 2Y5.06%

Revenue Next 3Y5.17%

Revenue Next 5Y4.65%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 12.24 indicates a correct valuation of CVS.
CVS's Price/Earnings ratio is rather cheap when compared to the industry. CVS is cheaper than 85.44% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 27.25. CVS is valued rather cheaply when compared to this.
A Price/Forward Earnings ratio of 11.58 indicates a reasonable valuation of CVS.
Compared to the rest of the industry, the Price/Forward Earnings ratio of CVS indicates a rather cheap valuation: CVS is cheaper than 85.44% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, CVS is valued rather cheaply.

		Industry Rank	Sector Rank
PE	12.24
Fwd PE	11.58

4.2 Price Multiples

Based on the Price/Free Cash Flow ratio, CVS is valued a bit cheaper than 73.79% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	16.92
EV/EBITDA	N/A

4.3 Compensation for Growth

CVS's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
A more expensive valuation may be justified as CVS's earnings are expected to grow with 15.17% in the coming years.

PEG (NY)0.51

PEG (5Y)N/A

EPS Next 2Y15.58%

EPS Next 3Y15.17%

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5. Dividend

5.1 Amount

CVS has a Yearly Dividend Yield of 3.22%.
CVS's Dividend Yield is rather good when compared to the industry average which is at 0.45. CVS pays more dividend than 98.06% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 1.82, CVS pays a better dividend.

		Industry Rank	Sector Rank
Dividend Yield	3.22%

5.2 History

The dividend of CVS has a limited annual growth rate of 5.72%.
CVS has paid a dividend for at least 10 years, which is a reliable track record.
CVS has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.

Dividend Growth(5Y)5.72%

Div Incr Years3

Div Non Decr Years28

5.3 Sustainability

722.81% of the earnings are spent on dividend by CVS. This is not a sustainable payout ratio.
CVS's earnings are growing more than its dividend. This makes the dividend growth sustainable.

DP722.81%

EPS Next 2Y15.58%

EPS Next 3Y15.17%

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CVS HEALTH CORP / CVS FAQ

What is the fundamental rating for CVS stock?

ChartMill assigns a fundamental rating of 4 / 10 to CVS.

What is the valuation status of CVS HEALTH CORP (CVS) stock?

ChartMill assigns a valuation rating of 6 / 10 to CVS HEALTH CORP (CVS). This can be considered as Fairly Valued.

What is the profitability of CVS stock?

CVS HEALTH CORP (CVS) has a profitability rating of 3 / 10.

Can you provide the expected EPS growth for CVS stock?

The Earnings per Share (EPS) of CVS HEALTH CORP (CVS) is expected to grow by 23.97% in the next year.

Can you provide the dividend sustainability for CVS stock?

The dividend rating of CVS HEALTH CORP (CVS) is 7 / 10 and the dividend payout ratio is 722.81%.