Current Market Conditions Paper
To analyze the current market value of the company Walgreen there are other topics that need to be addressed such as is included in this report. They are as follows:
Market Structure Over the past five years the private label over-the-counter (OTC) market is growing tremendously. The private label sector has an image of national brands and provides quality and innovation at a low cost price. Benefits are provided for retailers, consumers, and manufacturers to the point that private label healthcare growth should exceed solidly forever. The U.S. market for OTC private label products has reported an in-depth analysis of the various performances of OTC private label drugs and healthcare products such as: Cough, Cold, Allergy & Sinus Analgesics First Aid Anti-Smoking Gastrointestinal Foot Care Contraceptives/Family Planning Sleeping Aids Eye care Miscellaneous Remedies http:/store.pharmalicensing.com/public/stor/item/449-the-u-s-market-for-private-label-otc There are sales figures for private label products that have branded products in each category to analyze the average unit pricing, consumer demographics details, private label products, reports and new products that are introduced by various retailers. The trends and issues are discussed to shape the private label market to show future growth. Additionally, there are major profiles of manufacturers and retailers that point to the major private label players' with financial positions and new projects. Methodology consists of reports that include a mixture of primary and secondary research. Primary finding research has been provided through two sources, Information Resources Inc. (IRI) and Simmons Market Research Bureau (SMRB). Those reports include materials provided from reports, news stories, company literature and documents. New product introductions were introduced by the ProductScan material during the period of January 2004 to October 2005. Consumer advertising expenditures estimates are derived from data compiled by the TNS Media Intelligence of strategic advertising and communications intelligence through marketing. Trade association publications, business journals, government agencies, and other publicly available information are provided through secondary services. These services involve comprehensive research of secondary sources such as company literature, databases, investment reports and reports in medical and business journals. Impact of new companies entering the market Last year, CVS gained equal footing surpassing Walgreens through its acquisition in August 2004, whereby Eckerd Southern half of the chain allowed CVS to recognize Walgreens has been the leading player …show more content…
The Company's Website, www.walgreens.com, provides service and information to Internet customers. The Company expects to open 500 new stores in fiscal
2001 and have a total of 6,000 drugstores by the year 2010. The drugstores are engaged in the retail sale of prescription and non-prescription drugs, and carry additional product lines such as general merchandise, cosmetics, toiletries, household items, food and beverages. Customer prescription purchases can be made at the drugstores as well as through the mail, telephone and the Internet
For the nine months ended 5/01, sales rose 16% to $18.34 billion. Net income rose 19% to $668.7 million. Revenues reflect higher comparable store sales and the opening of new stores. Net income also reflects lower headquarters and advertising expenses and a $22.1 million litigation settlement gain.
Price elasticity of demand …show more content…
These competitors are store chains having pharmacies as retailers such as Wal-Mart, etc. Walgreen's pricing along with convenience has to exceed the other competitors offer. Consensus is calling for a 5-year growth rate of 22% per year on average. However, due to the extremely favorable trends that are developing in this industry, I am assuming a growth rate of 25%. As the graph above shows, the company has exhibited strong earnings growth and should continue to do so as favorable demographics increase, competition decreases and the industry infrastructure defends the gross margins. Based on the plowback ratio and a growth rate that will decline to GDP plus inflation, I calculated a per share equity value of $33.44. The Price/Value is .97, which indicates slight upside potential. www.WalgreenCompanyAnalysisMBAD6194-Spring2006
EPS 0.85 1.01 1.20 1.51 1.86 2.28 2.74 3.25 3.80 4.38 4.98 5.56 6.13 6.64 7.09 7.44 7.69
Net New Equity Investments 0.72 0.86 1.02 1.28 1.58 1.88 2.21 2.55 2.90 3.24 3.57 3.87 4.12 4.32 4.46 4.51 4.49
FCFE 0.13 0.15 0.18 0.23 0.28 0.39 0.53 0.70 0.91 1.14 1.41 1.70 2.00 2.32 2.63 2.93
To analyze the current market value of the company Walgreen there are other topics that need to be addressed such as is included in this report. They are as follows:
Market Structure Over the past five years the private label over-the-counter (OTC) market is growing tremendously. The private label sector has an image of national brands and provides quality and innovation at a low cost price. Benefits are provided for retailers, consumers, and manufacturers to the point that private label healthcare growth should exceed solidly forever. The U.S. market for OTC private label products has reported an in-depth analysis of the various performances of OTC private label drugs and healthcare products such as: Cough, Cold, Allergy & Sinus Analgesics First Aid Anti-Smoking Gastrointestinal Foot Care Contraceptives/Family Planning Sleeping Aids Eye care Miscellaneous Remedies http:/store.pharmalicensing.com/public/stor/item/449-the-u-s-market-for-private-label-otc There are sales figures for private label products that have branded products in each category to analyze the average unit pricing, consumer demographics details, private label products, reports and new products that are introduced by various retailers. The trends and issues are discussed to shape the private label market to show future growth. Additionally, there are major profiles of manufacturers and retailers that point to the major private label players' with financial positions and new projects. Methodology consists of reports that include a mixture of primary and secondary research. Primary finding research has been provided through two sources, Information Resources Inc. (IRI) and Simmons Market Research Bureau (SMRB). Those reports include materials provided from reports, news stories, company literature and documents. New product introductions were introduced by the ProductScan material during the period of January 2004 to October 2005. Consumer advertising expenditures estimates are derived from data compiled by the TNS Media Intelligence of strategic advertising and communications intelligence through marketing. Trade association publications, business journals, government agencies, and other publicly available information are provided through secondary services. These services involve comprehensive research of secondary sources such as company literature, databases, investment reports and reports in medical and business journals. Impact of new companies entering the market Last year, CVS gained equal footing surpassing Walgreens through its acquisition in August 2004, whereby Eckerd Southern half of the chain allowed CVS to recognize Walgreens has been the leading player …show more content…
The Company's Website, www.walgreens.com, provides service and information to Internet customers. The Company expects to open 500 new stores in fiscal
2001 and have a total of 6,000 drugstores by the year 2010. The drugstores are engaged in the retail sale of prescription and non-prescription drugs, and carry additional product lines such as general merchandise, cosmetics, toiletries, household items, food and beverages. Customer prescription purchases can be made at the drugstores as well as through the mail, telephone and the Internet
For the nine months ended 5/01, sales rose 16% to $18.34 billion. Net income rose 19% to $668.7 million. Revenues reflect higher comparable store sales and the opening of new stores. Net income also reflects lower headquarters and advertising expenses and a $22.1 million litigation settlement gain.
Price elasticity of demand …show more content…
These competitors are store chains having pharmacies as retailers such as Wal-Mart, etc. Walgreen's pricing along with convenience has to exceed the other competitors offer. Consensus is calling for a 5-year growth rate of 22% per year on average. However, due to the extremely favorable trends that are developing in this industry, I am assuming a growth rate of 25%. As the graph above shows, the company has exhibited strong earnings growth and should continue to do so as favorable demographics increase, competition decreases and the industry infrastructure defends the gross margins. Based on the plowback ratio and a growth rate that will decline to GDP plus inflation, I calculated a per share equity value of $33.44. The Price/Value is .97, which indicates slight upside potential. www.WalgreenCompanyAnalysisMBAD6194-Spring2006
EPS 0.85 1.01 1.20 1.51 1.86 2.28 2.74 3.25 3.80 4.38 4.98 5.56 6.13 6.64 7.09 7.44 7.69
Net New Equity Investments 0.72 0.86 1.02 1.28 1.58 1.88 2.21 2.55 2.90 3.24 3.57 3.87 4.12 4.32 4.46 4.51 4.49
FCFE 0.13 0.15 0.18 0.23 0.28 0.39 0.53 0.70 0.91 1.14 1.41 1.70 2.00 2.32 2.63 2.93