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Shares of Walgreens Boots Alliance Inc.
WBA,
rallied 3.1% in premarket trading Thursday, after the drugstore chain and healthcare services company beat fiscal first-quarter earnings expectations, but said it was nearly halving its dividend to bolster its cash position. Net losses for the quarter to Nov. 30 narrowed to $67 million, or 8 cents a share, from $3.72 billion, or $4.31 a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share fell to 66 cents from $1.16, but beat the FactSet consensus of 62 cents. Sales grew 10% to $36.71 billion, above the FactSet consensus of $34.95 billion, as retail pharmacy sales rose 6.4% to $28.94 billion and U.S. healthcare sales jumped 95.2% to $1.93 billion. Separately, the company said it lowered its quarterly dividend by 48%, to 25 cents a share from 48 cents a share. Before the dividend cut, Walgreens was the highest yielding Dow Jones Industrial Average
DJIA,
component with a yield of 7.51%. At Wednesday’s stock closing price of $25.57, the new annual dividend rate implies a yield of 3.91%, which would currently place it sixth in the Dow, and is still more than double the implied yield for the S&P 500
SPX,
of 1.50%. “We are evaluating all strategic options to drive sustainable long-term shareholder value, focusing on swift actions to right-size costs and increase cash flow, with a balanced approach to capital allocation priorities,” said Chief Executive Tim Wentworth.
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