In this article I am going to analyze Walgreens Boots Alliance Inc which its ticker (WBA) based in its earning per share and its (P/E) ratio to see how much its stock will worth in the 2027.
First, let see how does WBA’s EPS did in the past six year starting form 2017 in order to estimate its growth rate, as shown below:
As we can see from the above chart that WBA’s EPS is not following a valid trend, and it is fluctuated between positive and negative territory specially for the last three years. Therefor, I am going to use the sales and (P/S) ratio in order to predicate what will its stock will be in 2027.
As we can see form the above chart that sales increased from 2017 where it was 124.028 Billion until it reached 132.703 in year 2022 with growth rate 1.36%.
Now that we have the growth rate of WBA’s sales in the last five years, we are going to use this growth rate to estimate what will its sales be in 2027 ,which is five years from now by applying the following formula:
FV=PV(1+i)n
- Where
- PV = WBA sales in year 2022 = 132.703 Billion.
- i = growth rate of WBA sales estimated above = 1.36%
- n = years of investment = 5 years in 2027
By substitute the numbers estimated early in the above formula, I end up with WBA Inc’s sales in year 2027 equal to 141.975 Billion$.
Now, I have to see what was (P/S) ratio that WBA did have in the last six years, which as shown below:
Now we can estimate two scenarios for WBA stock price which is Bull market and the bear market.
For Bull market, I am going to take the highest (P/S) ratio which was 0.54 in year 2017, to see what will be the price of WBA stock in 2027:
Bull market WBA Stock’s price in 2027= (0.54)*(141.975 ) = 76.67$.
For Bear market, I will take the lowest (P/S) ratio which was 0.26 in year 2020, to see what will be the price of WBA stock in 2027.
Bear market WBA Stock’s price in 2027= (0.26)*(141.975 ) = 36.9$.
As of writing this article, Walgreens Boots Alliance Inc. stock price is 37.09$ which is below both bear scenario and the bull scenario. Therefore, I believe it’s a good opportunity for investment.
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