CVS HEALTH CORP (CVS) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:CVS - US1266501006 - Common Stock
83.02 USD
+0.01 (+0.01%)
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 decent growth rate and is not valued too expensively. CVS also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year CVS was profitable.
- CVS had a positive operating cash flow in the past year.
- CVS had positive earnings in each of the past 5 years.
- Each year in the past 5 years CVS had a positive operating cash flow.
1.2 Ratios
- CVS has a Return On Assets (0.18%) which is comparable to the rest of the industry.
- CVS has a Return On Equity (0.64%) which is in line with its industry peers.
- The Return On Invested Capital of CVS (4.90%) is comparable to the rest of the industry.
- 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
- CVS has a Profit Margin (0.12%) which is in line with its industry peers.
- CVS's Profit Margin has declined in the last couple of years.
- CVS has a Operating Margin of 2.73%. This is comparable to the rest of the industry: CVS outperforms 54.37% of its industry peers.
- CVS's Operating Margin has declined in the last couple of years.
- Looking at the Gross Margin, with a value of 13.88%, CVS is doing worse than 66.99% of the companies in the same industry.
- 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
- CVS has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
- The number of shares outstanding for CVS has been reduced compared to 1 year ago.
- The number of shares outstanding for CVS has been reduced compared to 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 (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.
- The Debt to FCF ratio of CVS (10.46) is comparable to the rest of the industry.
- A Debt/Equity ratio of 0.85 indicates that CVS is somewhat dependend on debt financing.
- Looking at the Debt to Equity ratio, with a value of 0.85, CVS is in line with its industry, outperforming 46.60% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.85 | ||
| Debt/FCF | 10.46 | ||
| Altman-Z | 2.28 |
ROIC/WACC0.6
WACC8.13%
2.3 Liquidity
- CVS has a Current 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.
- CVS has a worse Current ratio (0.83) than 81.55% 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 80.58% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.83 | ||
| Quick Ratio | 0.63 |
3. Growth
3.1 Past
- CVS shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 7.87%.
- CVS shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -5.20% yearly.
- Looking at the last year, CVS shows a small growth in Revenue. The Revenue has grown by 6.82% in the last 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
- CVS is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 13.81% yearly.
- 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.
4. Valuation
4.1 Price/Earnings Ratio
- A Price/Earnings ratio of 12.12 indicates a correct valuation of CVS.
- 85.44% of the companies in the same industry are more expensive than CVS, based on the Price/Earnings ratio.
- The average S&P500 Price/Earnings ratio is at 27.21. CVS is valued rather cheaply when compared to this.
- The Price/Forward Earnings ratio is 11.47, which indicates a very decent valuation of CVS.
- 85.44% of the companies in the same industry are more expensive than CVS, based on the Price/Forward Earnings ratio.
- When comparing the Price/Forward Earnings ratio of CVS to the average of the S&P500 Index (25.98), we can say CVS is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.12 | ||
| Fwd PE | 11.47 |
4.2 Price Multiples
- CVS's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. CVS is cheaper than 73.79% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.75 | ||
| 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%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 3.22%, CVS has a reasonable but not impressive dividend return.
- 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 1.81, 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
- CVS pays out 722.81% of its income as dividend. 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%
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%.