CVS HEALTH CORP (CVS) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:CVS - US1266501006 - Common Stock
82.235 USD
-0.45 (-0.54%)
We assign a fundamental rating of 4 out of 10 to CVS. CVS was compared to 102 industry peers in the Health Care Providers & Services industry. CVS has a bad profitability rating. Also its financial health evaluation is rather negative. CVS is not valued too expensively and it also shows a decent growth rate. CVS also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- CVS had positive earnings in the past year.
- CVS had a positive operating cash flow in the past year.
- CVS had positive earnings in each of the past 5 years.
- In the past 5 years CVS always reported a positive cash flow from operatings.
1.2 Ratios
- CVS has a Return On Assets (0.18%) which is in line with its industry peers.
- CVS's Return On Equity of 0.64% is in line compared to the rest of the industry. CVS outperforms 54.90% of its industry peers.
- CVS has a Return On Invested Capital (4.90%) which 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's Profit Margin of 0.12% is in line compared to the rest of the industry. CVS outperforms 50.00% of 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.
- In the last couple of years the Operating Margin of CVS has declined.
- With a Gross Margin value of 13.88%, CVS is not doing good in the industry: 66.67% of the companies in the same industry are doing better.
- In the last couple of years the Gross Margin of CVS has declined.
| 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%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so CVS is destroying value.
- Compared to 1 year ago, CVS has less shares outstanding
- CVS has less shares outstanding than it did 5 years ago.
- The debt/assets ratio for CVS is higher compared to a year ago.
2.2 Solvency
- CVS has an Altman-Z score of 2.28. This is not the best score and indicates that CVS is in the grey zone with still only limited risk for bankruptcy at the moment.
- CVS has a Altman-Z score (2.28) which is comparable to the rest of the industry.
- 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.
- CVS's Debt to FCF ratio of 10.46 is in line compared to the rest of the industry. CVS outperforms 44.12% of its industry peers.
- A Debt/Equity ratio of 0.85 indicates that CVS is somewhat dependend on debt financing.
- The Debt to Equity ratio of CVS (0.85) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.85 | ||
| Debt/FCF | 10.46 | ||
| Altman-Z | 2.28 |
ROIC/WACC0.6
WACC8.15%
2.3 Liquidity
- A Current Ratio of 0.83 indicates that CVS may have some problems paying its short term obligations.
- CVS's Current ratio of 0.83 is on the low side compared to the rest of the industry. CVS is outperformed by 81.37% of its industry peers.
- A Quick Ratio of 0.63 indicates that CVS may have some problems paying its short term obligations.
- CVS has a Quick ratio of 0.63. This is amonst the worse of the industry: CVS underperforms 80.39% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.83 | ||
| Quick Ratio | 0.63 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 7.87% over the past year.
- The Earnings Per Share has been decreasing by -5.20% on average over the past years.
- Looking at the last year, CVS shows a small growth in Revenue. The Revenue has grown by 6.82% in the last year.
- Measured over the past years, CVS shows a small growth in Revenue. The Revenue has been growing by 7.74% on average per year.
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.
- The Revenue is expected to grow by 4.65% on average over the next years.
EPS Next Y23.97%
EPS Next 2Y15.58%
EPS Next 3Y15.14%
EPS Next 5Y13.81%
Revenue Next Year7.58%
Revenue Next 2Y5.09%
Revenue Next 3Y5.2%
Revenue Next 5Y4.65%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- 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.
4. Valuation
4.1 Price/Earnings Ratio
- CVS is valuated correctly with a Price/Earnings ratio of 12.01.
- 86.27% of the companies in the same industry are more expensive than CVS, based on the Price/Earnings ratio.
- CVS is valuated cheaply when we compare the Price/Earnings ratio to 27.30, which is the current average of the S&P500 Index.
- CVS is valuated reasonably with a Price/Forward Earnings ratio of 11.36.
- Based on the Price/Forward Earnings ratio, CVS is valued cheaper than 86.27% of the companies in the same industry.
- When comparing the Price/Forward Earnings ratio of CVS to the average of the S&P500 Index (24.32), we can say CVS is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.01 | ||
| Fwd PE | 11.36 |
4.2 Price Multiples
- Based on the Price/Free Cash Flow ratio, CVS is valued a bit cheaper than 73.53% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.59 | ||
| 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 15.14% in the coming years.
PEG (NY)0.5
PEG (5Y)N/A
EPS Next 2Y15.58%
EPS Next 3Y15.14%
5. Dividend
5.1 Amount
- CVS has a Yearly Dividend Yield of 3.27%. Purely for dividend investing, there may be better candidates out there.
- Compared to an average industry Dividend Yield of 0.59, CVS pays a better dividend. On top of this CVS pays more dividend than 98.04% of the companies listed in the same industry.
- CVS's Dividend Yield is rather good when compared to the S&P500 average which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.27% |
5.2 History
- The dividend of CVS has a limited annual growth rate of 5.72%.
- CVS has been paying a dividend for at least 10 years, so it has a reliable track record.
- CVS has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)5.72%
Div Incr Years3
Div Non Decr Years28
5.3 Sustainability
- CVS pays out 722.81% of its income as dividend. This is not a sustainable payout ratio.
- The dividend of CVS is growing, but earnings are growing more, so the dividend growth is sustainable.
DP722.81%
EPS Next 2Y15.58%
EPS Next 3Y15.14%
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%.