In addition to increasing their dividend, the company has also been buying back their shares since 2007. On this count I would give them a B- grade because I do not consider share buybacks in 2014, 2015 and 2016 as an especially good use of shareholder capital. On the other hand, now that the stock is reasonably valued I would favor a continuation of share buybacks.
CVS Health Corporation: The Businesses
The following short business description provided courtesy of S&P Capital IQ:
“CVS Health Corporation, together with its subsidiaries, provides integrated pharmacy health care services. It operates through Pharmacy Services and Retail/LTC segments.
The Pharmacy Services segment offers pharmacy benefit management solutions, such as plan design and administration, formulary management, Medicare Part D services, mail order and specialty pharmacy services, retail pharmacy network management services, prescription management systems, clinical services, disease management programs, and medical pharmacy management services. This segment serves employers, insurance companies, unions, government employee groups, health plans, managed Medicaid plans and plans offered on public and private exchanges, other sponsors of health benefit plans, and individuals under the CVS Caremark Pharmacy Services, Caremark, CVS Caremark, CarePlus CVS Pharmacy, CVS Specialty, Accordant, SilverScript, NovoLogix, Coram, Navarro Health Services, and Advanced Care Scripts names.
As of December 31, 2015, it operated 24 retail specialty pharmacy stores, 11 specialty mail order pharmacies and 5 mail order dispensing pharmacies, and 83 branches for infusion and enteral services.
The Retail/LTC segment sells prescription drugs, over-the-counter drugs, beauty products and cosmetics, personal care products, convenience foods, seasonal merchandise, and greeting cards, as well as provides photo finishing services.
It operates 9,655 retail stores in 49 states, the District of Columbia, Puerto Rico, and Brazil primarily under the CVS Pharmacy, CVS, Longs Drugs, Navarro Discount Pharmacy, and Drogaria Onofre names; online retail pharmacy Websites; and 32 onsite pharmacy stores, long-term care pharmacy operations, and retail health care clinics.
The company was formerly known as CVS Caremark Corporation and changed its name to CVS Health Corporation in September 2014. CVS Health Corporation was founded in 1892 and is headquartered in Woonsocket, Rhode Island.”
CVS Health Corp (NYSE:CVS): Thesis for Growth
The consensus of 25 analysts reporting to S&P Capital IQ expect CVS to grow earnings by 13.57% for this fiscal year end followed by an 11.77% for fiscal year ending December 31, 2017, and 18 analysts expect earnings to grow 10.84% for fiscal year-end December 31, 2018. If these analysts are correct, that would suggest double-digit rates of return over the next couple of years. Additionally, these analysts’ earnings estimates are consistent with CVS management’s guidance range for adjusted earnings of $5.81 to $5.89 for this fiscal year end.
