Walgreen Reports Q1’14 results

Walgreen, one of my core holdings based on it’s dividend growth record, reported first quarter results today, in line with analysts’ expectations.

From their report:

・Adjusted first quarter earnings per diluted share increase 24.1 percent to 72 cents, compared with adjusted earnings per diluted share of 58 cents in year-ago quarter; GAAP earnings per diluted share increase 66.1 percent to 72 cents compared with 43 cents in last year’s first quarter
・GAAP and adjusted net earnings in this year’s quarter include the positive impact of 7 cents per diluted share attributable to a deferred tax adjustment applicable to Alliance Boots
・Adjusted first quarter earnings increase 24.4 percent to $688 million, compared with adjusted earnings of $553 million in year-ago quarter; GAAP earnings increase 68.3 percent to $695 million compared with $413 million in last year’s first quarter
・First-quarter sales reach record $18.3 billion as comparable store front-end sales increase 2.4 percent and retail prescription market share increases 50 basis points compared with year-ago quarter to 19.4 percent
・Strong focus on cost management limits adjusted selling, general and administrative expense dollar growth to 0.4 percent compared with the year-ago quarter; GAAP SG&A dollar growth decreases 0.4 percent compared with last year’s first quarter

These numbers raise TTM earnings to $2.85, a year-over-year increase of almost 28%, for a trailing PE of 21x.

Noteworthy to the Dividend Growth investor is the negative free cash flow per share of $0.21. Payout ratio is measured against a company’s FCF, and any decreases there could lead to decreases in growth, if not, in a worst-case scenario, actual decreases in dividend payouts. That said, Walgreen has a record of dividend increases stretching 38 years.

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