CVS HEALTH CORP (CVS) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:CVS - US1266501006 - Common Stock
83.01 USD
+0.33 (+0.4%)
83.01 USD
0 (0%)
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 may be in some trouble as it scores bad on both profitability and health. CVS has a correct valuation and a medium growth rate. CVS also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- CVS had positive earnings in the past year.
- In the past year CVS had a positive cash flow from operations.
- CVS had positive earnings in each of the past 5 years.
- CVS had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- With a Return On Assets value of 0.18%, CVS perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
- With a Return On Equity value of 0.64%, CVS perfoms like the industry average, outperforming 54.90% of the companies in the same industry.
- CVS's Return On Invested Capital of 4.90% is in line compared to the rest of the industry. CVS outperforms 56.86% of its industry peers.
- CVS had an Average Return On Invested Capital over the past 3 years of 6.22%. This 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
- Looking at the Profit Margin, with a value of 0.12%, CVS is in line with its industry, outperforming 50.00% of the companies in the same industry.
- CVS's Profit Margin has declined in the last couple of years.
- CVS has a Operating Margin (2.73%) which is comparable to the rest of the industry.
- In the last couple of years the Operating Margin of CVS has declined.
- CVS has a Gross Margin of 13.88%. This is in the lower half of the industry: CVS underperforms 66.67% 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%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), CVS is destroying value.
- The number of shares outstanding for CVS has been reduced compared to 1 year ago.
- 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
- 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 50.00% 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.
- CVS has a Debt to FCF ratio (10.46) which is comparable to the rest of the industry.
- A Debt/Equity ratio of 0.85 indicates that CVS is somewhat dependend on debt financing.
- CVS has a Debt to Equity ratio (0.85) which 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.
- The Current ratio of CVS (0.83) is worse than 81.37% of its industry peers.
- A Quick Ratio of 0.63 indicates that CVS may have some problems paying its short term obligations.
- The Quick ratio of CVS (0.63) is worse than 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.
- 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.
- CVS shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.74% yearly.
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
- The Price/Earnings ratio is 12.12, which indicates a correct valuation of CVS.
- Compared to the rest of the industry, the Price/Earnings ratio of CVS indicates a rather cheap valuation: CVS is cheaper than 86.27% of the companies listed in the same industry.
- Compared to an average S&P500 Price/Earnings ratio of 27.21, CVS is valued rather cheaply.
- Based on the Price/Forward Earnings ratio of 11.47, the valuation of CVS can be described as reasonable.
- Based on the Price/Forward Earnings ratio, CVS is valued cheaply inside the industry as 86.27% of the companies are valued more expensively.
- Compared to an average S&P500 Price/Forward Earnings ratio of 24.26, CVS is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.12 | ||
| Fwd PE | 11.47 |
4.2 Price Multiples
- 73.53% of the companies in the same industry are more expensive than CVS, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.74 | ||
| 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)0.51
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.
- CVS's Dividend Yield is rather good when compared to the industry average which is at 0.59. CVS pays more dividend than 98.04% 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 | 3.27% |
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 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.
- 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%.