Walgreens’ Turbulent Year: A Cautionary Tale
A Sharp Decline
Walgreens Boots Alliance (NASDAQ: WBA) suffered a devastating blow in 2024, with its stock plummeting 64% over the course of the year. The perfect storm of declining vaccine demand, consumer discretionary spending headwinds, and misguided acquisitions led to a series of dismal earnings reports, forcing the company to take drastic measures.
Cutting Dividends and Taking a Hit
In January, Walgreens slashed its dividend by 48% to $0.25 a quarter, citing a need to “right-size” costs and increase cash flow. This move was accompanied by a maintained adjusted earnings per share guidance of $3.20-$3.50. However, the company’s woes didn’t end there.
A Multibillion-Dollar Mistake
In the second quarter, Walgreens took a staggering $5.8 billion goodwill impairment on VillageMD, a primary care and urgent care business it acquired in 2021. The company’s growth strategy in VillageMD failed to materialize, leaving investors reeling.
A Series of Disappointments
Walgreens’ stock continued to tumble throughout the year, with its worst day coming on June 27, when it fell 22% following another disappointing earnings report. The company slashed its full-year EPS guidance to $2.80-$2.95, citing challenging pharmacy industry trends and a weak consumer environment.
A Glimmer of Hope
Despite the turmoil, Walgreens showed signs of recovery in its first-quarter earnings report earlier this month. While management expects adjusted earnings per share of just $1.40-$1.80 this year, the business appears to have stabilized, and the top line is growing.
A Dividend Investor’s Dream?
For dividend investors, Walgreens is an attractive option, offering a dividend yield of 10.9%. If the business has indeed stabilized, this yield could be a safe bet.
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