What Hedge Fund Analysts Expect From Walgreen

This year Walgreen (WAG) has experienced significant stock and year over year earnings growth while simultaneously falling short of analyst expectations several times over the same period. An aging US population and expanding insurance due to the Affordable Care Act have boosted sales and put Walgreen and other pharmaceutical companies in good position going forward. Walgreen Co., the largest drug store retail chain in the US is expected to post FQ1 2014 earnings on Friday December 20th.

The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.

The current Wall Street consensus expectation is for WAG to report 72c EPS and $18.321B revenue while the current Estimize consensus from 13 Buy Side and Independent contributing analysts is 73c EPS and $18.279B revenue. The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case, we’re seeing a small difference between the Estimize and Wall Street numbers.

By tapping into a wider range of contributors including hedge-fund analysts, asset managers, students, and non professionals we have built a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s true expectations.

Over the past 4 months we have seen both Wall Street and Estimize increase their revenue expectation while cutting back on profit forecasts. The Wall Street EPS consensus has dropped from 77c to 72c and the Estimize consensus has fallen from 76c to 73c. Wall Street’s revenue expectations have increased from $18.242B to $18.322B and the Estimize consensus has surged from $18.184B to $18.279B.

The distribution of estimates published by analysts on Estimize range from 68c to 80c EPS and $18.000B to $18.354B in revenues. This quarter our contributing analysts are expecting Walgreens to beat Wall Street on EPS but fall short on revenues.

We are seeing a much larger distribution of estimates compared to previous quarters. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A greater distribution signaling the potential for more volatility post earnings, a smaller vice versa.

The analyst with the highest estimate confidence rating this quarter is anmikyoso who projects 74c EPS and $18.308B in revenue. This quarter the analyst with the top confidence rating, who is ranked 30th overall among over 3,300 contributing analysts, is expecting Walgreen to beat on EPS but miss slightly on revenue. Confidence ratings for each user are calculated through algorithms developed by our deep quantitative research which look at correlations between analyst track records and tendencies as they relate to future accuracy. We believe that everyone’s opinion matters, regardless of who they are, where they’re from, or what it says on their business card.

While the consensus from our community is expecting Walgreen to report in a similar fashion to the numbers predicted by Wall Street, we are seeing an unusually large distribution of estimates which could mean increased volatility after the report. Both the Estimize consensus and our analyst with the top confidence rating for this report are projecting Walgreen to outperform the Wall Street consensus for EPS but come up slightly short on revenue.