If You Invested $10,000 In Walgreens 5 Years Ago, Here’s How Much You Would Have Today

Walgreens Boot Alliance (NASDAQ: WBA) has undergone many changes over the years. But not everyone paid. Today, the company’s strategy is to invest billions in primary care, as it plans to open hundreds of clinics across the country through a partnership with VillageMD. He is looking to play a bigger role in healthcare, leveraging consumer confidence in his company.

And while Walgreens remains a trusted neighborhood pharmacy, has the healthcare stock proven to be a trustworthy investment? Let’s take a look at how the business has changed in recent years and what a $10,000 investment in it would look like today five years ago.

Image source: Getty Images.

It’s been a bumpy ride for the company

In 2017, Walgreens was just a few years away from merging with Alliance Boots, a UK-based health and beauty group. With a broader business and greater geographic reach, there were significant growth opportunities for Walgreens. But the numbers tell a different story, as sales growth has been disappointing in recent years:

WBA Earnings Table (Annual)

WBA Earnings Data (Annual) by YCharts

Now the company seems to be looking more to the US market as it divests other assets. Walgreens has sold its European distribution business, Alliance Healthcare, to Amerisource Bergen in 2021 for $6.5 billion. And now it’s rumored to be in talks to also sell its UK-based Boots business, which has over 2,200 health and beauty stores. This would further streamline its operations and free up additional resources that could help expand its primary care clinics into the US market.

Suffice it to say, that hasn’t been a straight or predictable path for Walgreens in recent years. But how good has the investment been over the past five years?

Here’s how much a $10,000 investment would be worth now

Given the challenges of the business and a lack of meaningful growth, the following chart shouldn’t be too surprising. The company’s stock split almost in half and would have resulted in a gigantic drop in a $10,000 investment:

WBA Chart

WBA data by YCharts

The only upside, however, is that the company’s dividend remained intact. Walgreens has continued to raise it all those years, and its streak of rate increases now stands at 46 straight years. There are only four years left to become a Dividend King. If you count the company’s dividend, then you would have recouped some of your losses:

Table of WBA Total Achievement Levels

WBA Total Achievement Level Data by YCharts

The sad reality is that you would have been better off investing in the S&P500. Although the stock’s dividend of 4.4% is better than the average index return of 1.4%, a high payout alone isn’t enough to make a stock a good buy or offset underperforming returns.

Is Walgreens a good buy today?

The problem with Walgreens is that with so many moving parts and the company shifting gears, it’s hard to gauge and predict its performance next year, let alone the next five. With behemoths like Amazon and walmart Deepening into healthcare, with the former acquiring an online pharmacy while the latter is launching health centers, competition could put pressure on Walgreens’ already thin margin.

The silver lining is that the stock is heavily discounted – Walgreens trades at just six times its earnings. That doesn’t mean it’s a slam dunk to be a good buy, but it does compensate investors for some of the risk and uncertainty ahead.

Walgreens remains a leading name in drugstore retail and is a trusted brand among consumers. And by simplifying its operations, focusing on the United States, relying on trust and opening up primary care practices, it could be on a better path than when it was perhaps trying to be too wide and diverse. While the last five years haven’t been great for Walgreens, I’m optimistic that if it succeeds in making profitable changes, the next five will be better.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. David Jagielski has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Amazon. The Motley Fool has a disclosure policy.

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