Thank you so much for explaining the difference between lease obligations and debt obligations. I would really appreciate these types of tangents in more videos! Great stuff.
You know what else is value Cameron. This video. Great work. Your direct and bottomline way of speaking comes across. Please don't change. You're an IB that does RUclips as apposed to all these FA hobbyists who are in the RUclips business. They make shallow content sensationalist videos for clicks. Your content is solid man. Loved it and subscribed to you already.
I need to read through the why here. Haven't had time. Will do an episode.
5 месяцев назад+1
@@CstewartCFA yes please, do that episode as it seems CVS is getting more cost for insurer (higher cost, less proffit), and debt can be a cost burden in the mid term...
Hi Cameron, long time viewer and huge admirer of your analysis style. At $58 price, do you still think CVS hold the Trifecta value? Is it possible to do a fresh video on CVS and QCOM?
While you were “meh” on it two years ago, and there is litigation risk, could 3M be worth another video as it hovers around $100 per share? And thank you for all your analyses-I am currently holding CVS and considering purchasing more.
Hi and thanks for the video. Thanks for clarifying the meaning of Lease Obligations and Long term Debt. I have never seen it the way you showed it. However it seems that they actually increased the amount of shares in the market in 2018, 2019, 2020 and 2021 and started the repurchases last year. Greetings from Bogotá, Colombia.
Thanks for the video on CVS. Could you do a deeper dive on Tyson food? You analysed it before and did a 'short' on it, so I'm interested to see your projections. Or Foot Locker, that has so much negativity, but I see some value there. Thanks.
I want a management team like CVS, shrewdly buying complementary businesses. Using a little debt doesn't bother me. Nice analysis Cameron, can you do any of the homebuilders next? I think mth has lots of room to run still.
Why are you so bullish on MTH? From my rudimentary analysis Lennar seems to be a competitive peer. Can you explain. Your sector conclusion please? Thanks.
@@nonexistent5030 The industry has strong tailwinds. I like both management teams about equal. Growth prospects I feel a company 1/8 size of LEN will grow faster over time. It's easier to move needle of smaller companies.
Hi Cameron, Thanks a lot for your clear explanation! This is very useful. Could you please explain me in a new video how to calculate the present intrinsic value using the WACC and the ROIC?
Cameron, this is funny: I saw you previous video, did my dd and bought position. Today I doubled down and now I see your video. 😊. Thank you for your work!
I always worry when someone thinks CVS is just a retail operation and Aetna. Both of those segments are nothing compared to the PBM which he never mentions.
Hi Cam - Great analysis (as usual). Debt is fixed and at reasonable rates versus market (page 152 of 10K). Is there an opportunity for CVS to hold onto that cheap debt and buy back more shares? Thank you for your insight.
@Cameron - One puzzle is that even Aetna competitors like Cigna have been avoiding Walgreens, etc and don't use their own ExpressScripts and route both 90-day fills to CVS. and CVSCaremark. THIS IS WEIRD! Does this mean that CVS is buying Cigna and similar insurers' business by underpricing fills? Please clarify.
Proceeds from issuance of long-term debt 10,898 Repayments of long-term debt (1,787) That's what I see on their latest earnings report from this week. What's your opinion on that Cameron? I don't think that's aligned with your statement about the company acknowledging they have too much debt and also is against the trend of paying down debt...
Thanks for the analysis Cameron. In the case of CVS, I think we also need to take in consideration the recent acquisition of Oak Street Health (May'23). The company has announced the acquisition was partially funded with Debt (around $ 5B) plus existing resources (Cash), which will change some of these ratios. Personally I do not expect CVS to produce that level of cashflow in the sort term, although has a great growth prospects Could your team prepare the analysis of #UPS?
Cameron, thanks for all the curriculum that you provide. Can you do $IP analysis? I want to see if my assumptions between $IP and $WRK are the same as yours :)
CVS appears to be just what I was looking for. Great price and growth potential. And the dividend date fills a big empty spot in my portfolio. Thanks for the analysis!
It will be interesting to see how the Blue Shield changes plays out over the next year or two. If CVS was a good buy a month ago, it's an even better buy today :)
Their operating margin and ROIC seem anemic and decreasing. Also seems to have a lot of debt given that they aren't able to effectively invest in the business. Finally, it seems like they are facing increased competition from e-commerce pharmacies which can operate with higher margins.
This has to do with the way they book their accounting primarily. Youre not entirely wrong but they also report growth investments under SG&A. And growth investments return to you. So in recent years especially their "returns" have declined but their returns as reported on paper neglect to honor their long term growth opportunities. Read your 10ks.
As for your remarks on e-commerce, read their statements on their present and future intended sales of brick and mortar and transition to e-commerce. Due diligence makes money. Superfluous watered down ratio investing misses golden opportunities.
Hello Cameron , I'm trying to remember something important you said in one of your video about EBITDA and cash flow moving together in the same way ? and if not it would mean that something it's going on with the accounting right ? Or maybe was it EBITDA and something else ? Thank you
EBITDA (or operating profit) and cash flow from Operations should move in the same direction over time. Not a hard rule but overtime they need to line up.
I don’t know Cameron. This one is a tough one. 1. Its a retail company which already makes it kind of iffy for me. Its also a health company. I tend to avoid the healthcare sector as a whole as its really tough to value. 2. Their revenue growth is currently being fueled by acquisition’s which makes it even more tough. 2/3 of their acquisition’s are not profitable and they paid a boat load of money for those companies. Its a complete gamble whether those acquisition’s will even pay off which makes it even more difficult to value. 3. They have an extremely low ROIC. A high ROIC is a sign that a company has a moat and doesn’t need to put a lot of cash back into the business to make good returns. CVS currently has a ROIC of around 6% which is extremely mediocre. 4. The entire consumer retail pharmacy sector is struggling and has been for awhile. Walgreens is on the decline, Rite Aid is basically on the verge of bankruptcy, and CVS is spending a ton of money to desperately try to recreate the business that nobody knows if its going to pay off. For me this is a pass. As Warren Buffett always said buy a business thats easy to understand. Retail is not my forte and I avoid the health sector all together. On top of it growth being fueled by acquisition’s and massive amounts of money being spent to acquire unprofitable companies is too much. Appreciate the video none the less. Thank you sir ❤️ Edit: I have been doing my own due diligence and decided to enter a small position into it.
You should be seeking out things that challenge your convictions, so you know if you have missed something. Unless you want to suffer from confirmation bias.
Thank you for the video. If my numbers are right, you get a 10% ROE at CVS…I think that buying the stock at 1x book value you get 10% IRR in the long run, doesn’t seem a great deal to me.
Great job on the analysis of the fin statements. I had no idea that leases have GAAP rules as you stated. I don't think accounting is so deeply covered in the CFA levels, so I guess you must also have a degree in accounting. ?
The red flag I see is that they have spent $18B buying 2 health care companies early this year. This reversed all the debt paydowns in the past 4 years. Seems that they are on a buying spree, and growing aggressively by acquisitions, not organically. Not all the acquisitions work out in the long term, which presents a significant risk. I sold all my shares.
This is actually an incredibly intelligent diversification of their business. Inflation is wearing at the gross margin of their pharmaceutical sales business. Cogs for pharma is going to continue eating into margins which warrants a business restructure. They are also adding value to consumers/clients by integrating vertically, diving headfirst into the aged care space. With an aging population you want to be able to enhance care provision for that population and leverage that added value to secure enhanced returns to stakeholders and shareholders. This is an extremely attractive competitive move and appears to be ahead of competition when you look at Walgreens or even united Healthcare (although united has an astounding management track record and is beginning to dip their toe into this market, CVS is just more aggressive)
After your video I decided to jump in and analyse the company myself. Here's a few reasons I won't invest: 1. Their margins are very VERY low. Mainly on their main segment. 2. There's a huge chunk of short term obligations that are only payable by selling investory (that seems to be increasing yoy, so not really a good sign) or by getting even more debt. 3. Most of those short term obligations are operational. A lot of accrued expenses and payables. So it's a no go. I didn't even dive deeper. Good luck anyway.
CVS will be around 30 years from now. CVS stock price 30 years from now will not be less than 72 dollars per share. Add-in dividends and it is a no brainer. Yet people are willing to buy truck loads of starbucks which is over priced by 40% 🤣🤣🤣 and a luxury item. Not a necessity to life.
Great analysis. Unfortunately, CVS is down b/c of emerging competition, i.e., AMZ, and regulatory pressure to reduce cost of medical care & prescriptions. Additionally, Blue Shield of California intends to expand its pharmacy list, which will reduce CVS’s share of that business. So, the issues surrounding CVS relate to investor uncertainty about the future, not past performance. I’m a holder, mainly b/c of their incredible free cash flows, but I’ve stopped accumulating. If the rest of 2023 turns out okay, I’ll restart buying in 2024. Thanks for the great work👍🏾
with CVS I'm seeing a net profit margin of 1.19%. To me that's a big risk in this business. The money that's left at the end is tiny and with inflation still a thing, can be fluctuating lower even.
You need to start considering free cash flow margin, as that is pure cash margin that is being generated as a percentage of revenue. I would focus on free cashflow margin and price to free cash flow when analyzing CVS since it is a more stable and reliable measure than US GAAP based profit margin and P/E ratios. US GAAP profit includes write-offs and non-recurring items that usually won't show up in free cash flow, which in turn makes it hard to understand how a company is performing each year in comparison to prior years.
Hi Cam - been your fan since 2019 I think and have watched everyone of your videos. Amazingly, there’s always a new nugget of wisdom or two even after all these many videos. Thank you so much for putting such a stellar effort into educating lay persons like us - love the emphasis, the rigor and of course, the utter humility! The better half now knows not to disturb when she hears the now very familiar voice :)
Wouldn’t touch them as there are superiors retailers out there imho. Costco treats pharmacy department well and CVS controls prices and is predatory. I think Walgreens goes out of business first though. Many Generics at Costco are actually cheaper than using your insurance of any kind at CVS. It’s massively high priced.
Only 1/3 of their revenue is retail pharmacy. They are also 1/3 an insurance company and 1/3 a PBM. Not a worthwhile comparison to Costco. Also, when I want to run in real quick to a pharmacy chain to buy a random OTC drug, the last place I want to go to is Costco and park in a parking lot of 1,000 cars, walk through a mob of shoppers across a massive store to get to their drugs. Costco definitely provides value for retail pharmacy but it's not comparable to CVS's retail.
I watched your video twice now. As mentioned in my other comment I love it. As a recommendation I would ask that you factor in the stock's daily ATR value (in %). CVS has an ATR of 1.7% per day. That means in order for it to appreciate significantly it's going to take a while. Are there other stocks with 3-5% ATR per day that pose great value? I know you're long term but many here are not. So if we can overlap on somethings then great. We get a trade (we add our TA work for timing) and you get your investment. Otherwise such stocks are too slow imo. Your call obviously. Peace.
Cameron - Thank you so much for the quality content you make. I really enjoyed your explanation about how CVS encapsulates each store in its own LLC for rent liability insulation.
Sure Hope You Are Correct. I Bought Today, On The Selloff 21,625 shares at $70.335 average per share. Yeh, really did spend over 1.5 Million on this today.
Great video. Can you do an update video on Magna International? Sentiment around the auto industry seems to be quite negative. It would be interesting to look at BorgWarner as well. They missed earnings expectations by a cent and the stock collapsed 10 percent today. This is despite them raising guidance for the rest of the year.
Hi there Cameron, I really like your content; it's on point and very informative 🔥🔥. Do you have a biz' mail and are you open for feedback? I just want to share my thoughts regarding on your videos if that's okay with you.
Hi Cameron, thanks for your wonderful analysis. I think doing a sector analysis will give the audience more insight rather than individual stock pick. like in the case with CVS, with CVS being undervalued, you see valuations of Aetna being free(BOGO). But overall CVS is losing is widespread moat of being its own PMB(CVS also own PBM CVS caremark) because the retail pharmacy in general is losing profitability. Multiple front drug pricing regulations, competition, e-commerce threats and automation does not bode well for the retail pharmacy sector as whole.
The site I'm looking at shows CVS to have a PE(TTM) of 22.46 and a FWD PE of 7.88. Does this make any sense? Are earnings really expected to nearly triple in one year? Where do these forward estimates come from that make up FWD PE?
They had big expense this year that they do not expect it will reoccure. If it does not reoccure EPS will return to previous numbers and PE will contract
I'd like to point out an error in the math. If you compound 25% annually for 10 years, you get $70*(1.25^10) = $651 per share. To get $156 in 10 years, it means that IRR is only 8.34%! Verify by calculating $70*(1.0834^10)=$156. I'm a big fun of your work, we all make mistakes.
They paid 69 billion for the acquisition. But that is the price they paid. I am curious to know what value they got. As this is an entry into further due diligence, the first thing l would be doing is attempting to value that acquisition. Did they pay a fair price? Overpay? Got it cheap? Unless the above can be answered conservatively, it's not a selling point. All the other fundamentals are interesting though, enough to warrant exploring and answering the above.
Please make an updated video after the drop to $55
Thank you so much for explaining the difference between lease obligations and debt obligations. I would really appreciate these types of tangents in more videos! Great stuff.
Couldn't agree more. Those tangents are perhaps the primary reasons I watch his videos. So educational.
You know what else is value Cameron. This video. Great work. Your direct and bottomline way of speaking comes across. Please don't change. You're an IB that does RUclips as apposed to all these FA hobbyists who are in the RUclips business. They make shallow content sensationalist videos for clicks. Your content is solid man. Loved it and subscribed to you already.
Hey Cameron, Are you still positive on CVS with the current "sell off"? Now down 30%.
I need to read through the why here. Haven't had time. Will do an episode.
@@CstewartCFA yes please, do that episode as it seems CVS is getting more cost for insurer (higher cost, less proffit), and debt can be a cost burden in the mid term...
I would be interested in seeing a follow-up discussing the implications of the BCBS Insurance withdrawl from CVS and how that could affect the stock!
Hi Cameron, long time viewer and huge admirer of your analysis style. At $58 price, do you still think CVS hold the Trifecta value? Is it possible to do a fresh video on CVS and QCOM?
While you were “meh” on it two years ago, and there is litigation risk, could 3M be worth another video as it hovers around $100 per share? And thank you for all your analyses-I am currently holding CVS and considering purchasing more.
Hi and thanks for the video. Thanks for clarifying the meaning of Lease Obligations and Long term Debt. I have never seen it the way you showed it. However it seems that they actually increased the amount of shares in the market in 2018, 2019, 2020 and 2021 and started the repurchases last year. Greetings from Bogotá, Colombia.
Thanks for the video on CVS. Could you do a deeper dive on Tyson food? You analysed it before and did a 'short' on it, so I'm interested to see your projections. Or Foot Locker, that has so much negativity, but I see some value there. Thanks.
Doubled down on CVS last week. You gotta do a video on Truist (TFC) next!! An equally screaming buy IMO
I want a management team like CVS, shrewdly buying complementary businesses. Using a little debt doesn't bother me. Nice analysis Cameron, can you do any of the homebuilders next? I think mth has lots of room to run still.
Why are you so bullish on MTH? From my rudimentary analysis Lennar seems to be a competitive peer. Can you explain. Your sector conclusion please? Thanks.
@@nonexistent5030 The industry has strong tailwinds. I like both management teams about equal. Growth prospects I feel a company 1/8 size of LEN will grow faster over time. It's easier to move needle of smaller companies.
I bought 100 shares last week
Hi Cameron, thank you for the video. always good stuff!! Is it possible to make an analysis of Enphase ?
You made a great case for CVS as a long term investment... Wall street hates this stock, I don't get it.
Hi Cameron, Thanks a lot for your clear explanation! This is very useful. Could you please explain me in a new video how to calculate the present intrinsic value using the WACC and the ROIC?
Cameron, this is funny: I saw you previous video, did my dd and bought position. Today I doubled down and now I see your video. 😊.
Thank you for your work!
That's gold Cameron! Gold!
I always worry when someone thinks CVS is just a retail operation and Aetna. Both of those segments are nothing compared to the PBM which he never mentions.
excelent video, very intuitive and easy to understand. awesome
They are not just a retail location !
Hi Cam - Great analysis (as usual). Debt is fixed and at reasonable rates versus market (page 152 of 10K). Is there an opportunity for CVS to hold onto that cheap debt and buy back more shares? Thank you for your insight.
@Cameron - One puzzle is that even Aetna competitors like Cigna have been avoiding Walgreens, etc and don't use their own ExpressScripts and route both 90-day fills to CVS. and CVSCaremark. THIS IS WEIRD! Does this mean that CVS is buying Cigna and similar insurers' business by underpricing fills? Please clarify.
Can you do a video on texas roadhouse? That would be awesome!
Proceeds from issuance of long-term debt 10,898
Repayments of long-term debt (1,787)
That's what I see on their latest earnings report from this week. What's your opinion on that Cameron? I don't think that's aligned with your statement about the company acknowledging they have too much debt and also is against the trend of paying down debt...
Great pick I’ve been loading up on it
Best man Just bought in at 67 will average down and Hope we will See 63 and 58.
Cameron are you adding in the large dividend into value estimate ... it is yielding 3.5%
That is a component of the free cash flow yield.
Thanks for the analysis Cameron.
In the case of CVS, I think we also need to take in consideration the recent acquisition of Oak Street Health (May'23). The company has announced the acquisition was partially funded with Debt (around $ 5B) plus existing resources (Cash), which will change some of these ratios.
Personally I do not expect CVS to produce that level of cashflow in the sort term, although has a great growth prospects
Could your team prepare the analysis of #UPS?
I would like to see him do UPS as well. He did FedEx not too long ago.
Screaming buy at 55 today after bad earnings
Cameron, thanks for all the curriculum that you provide. Can you do $IP analysis? I want to see if my assumptions between $IP and $WRK are the same as yours :)
CVS appears to be just what I was looking for. Great price and growth potential. And the dividend date fills a big empty spot in my portfolio. Thanks for the analysis!
GWH? KNOP? ABCL? CCLD? TJX? Thanks in advance.
What about the stock based compensation in CVS is very high which is diluting shareholders alot?
Thanks for the analysis and the explanations! What do you think of the nearly 80 billion in goodwill that is blowing up their assets?
It will be interesting to see how the Blue Shield changes plays out over the next year or two. If CVS was a good buy a month ago, it's an even better buy today :)
Great video, thank you!
Their operating margin and ROIC seem anemic and decreasing. Also seems to have a lot of debt given that they aren't able to effectively invest in the business. Finally, it seems like they are facing increased competition from e-commerce pharmacies which can operate with higher margins.
This has to do with the way they book their accounting primarily. Youre not entirely wrong but they also report growth investments under SG&A. And growth investments return to you. So in recent years especially their "returns" have declined but their returns as reported on paper neglect to honor their long term growth opportunities. Read your 10ks.
As for your remarks on e-commerce, read their statements on their present and future intended sales of brick and mortar and transition to e-commerce. Due diligence makes money. Superfluous watered down ratio investing misses golden opportunities.
Really interesting about the bank debt and lease obligations 😊
what do you think on shake shack stock?
can you review health care insurance stocks like UNH ,Humana,cigna anthem ?
Hello Cameron ,
I'm trying to remember something important you said in one of your video about EBITDA and cash flow moving together in the same way ? and if not it would mean that something it's going on with the accounting right ? Or maybe was it EBITDA and something else ?
Thank you
EBITDA (or operating profit) and cash flow from
Operations should move in the same direction over time. Not a hard rule but overtime they need to line up.
@@CstewartCFA thank you appreciate your answer ! Take care 🙏🙏
I don’t know Cameron. This one is a tough one.
1. Its a retail company which already makes it kind of iffy for me. Its also a health company. I tend to avoid the healthcare sector as a whole as its really tough to value.
2. Their revenue growth is currently being fueled by acquisition’s which makes it even more tough. 2/3 of their acquisition’s are not profitable and they paid a boat load of money for those companies. Its a complete gamble whether those acquisition’s will even pay off which makes it even more difficult to value.
3. They have an extremely low ROIC. A high ROIC is a sign that a company has a moat and doesn’t need to put a lot of cash back into the business to make good returns. CVS currently has a ROIC of around 6% which is extremely mediocre.
4. The entire consumer retail pharmacy sector is struggling and has been for awhile. Walgreens is on the decline, Rite Aid is basically on the verge of bankruptcy, and CVS is spending a ton of money to desperately try to recreate the business that nobody knows if its going to pay off.
For me this is a pass. As Warren Buffett always said buy a business thats easy to understand. Retail is not my forte and I avoid the health sector all together. On top of it growth being fueled by acquisition’s and massive amounts of money being spent to acquire unprofitable companies is too much.
Appreciate the video none the less. Thank you sir ❤️
Edit: I have been doing my own due diligence and decided to enter a small position into it.
I’m curious why the change of heart?
@@lmaofhest638wondering the same.
An explanation on why you suddenly changed your view would be appreciated
How did you calculate EBITDA? I'm getting 12,146 for 2022.
Will you ever do an analysis on a REIT?
Glad to know I am not the only one excited about CVS. Also, thank you for putting a coherent and thorough analysis to help me reinforce my conviction!
You should be seeking out things that challenge your convictions, so you know if you have missed something. Unless you want to suffer from confirmation bias.
@@Custodian123i agree it’s not a buy the dip opportunity
Bought in at 72- hope it gets to 90’s.
Thank you for the video. If my numbers are right, you get a 10% ROE at CVS…I think that buying the stock at 1x book value you get 10% IRR in the long run, doesn’t seem a great deal to me.
Can you please do an analysis of SOFI stock soon?
Great info Thank you
Thank you for your excellent job. Its improve my accounting knowlege and english to. Best regards from Poland
Very interesting, thank you Cameron. I'm surprised your channel doesn't have more subscribers. I expect you're overdue for a subscriber rally.
Thanks. I don’t make click bait videos so the growth is much slower
Great Video Sir. Please cover CitiBank. Thank you
Into the portfolio on Monday. Thanks Cameron.
Any update on $CVS? Outlook, stock price, etc?
will do
Great job on the analysis of the fin statements. I had no idea that leases have GAAP rules as you stated. I don't think accounting is so deeply covered in the CFA levels, so I guess you must also have a degree in accounting. ?
How about a return to Estee Lauder? They are on a sale right now
The red flag I see is that they have spent $18B buying 2 health care companies early this year. This reversed all the debt paydowns in the past 4 years. Seems that they are on a buying spree, and growing aggressively by acquisitions, not organically. Not all the acquisitions work out in the long term, which presents a significant risk. I sold all my shares.
Well... sucks to be you then.
This is actually an incredibly intelligent diversification of their business. Inflation is wearing at the gross margin of their pharmaceutical sales business. Cogs for pharma is going to continue eating into margins which warrants a business restructure. They are also adding value to consumers/clients by integrating vertically, diving headfirst into the aged care space. With an aging population you want to be able to enhance care provision for that population and leverage that added value to secure enhanced returns to stakeholders and shareholders. This is an extremely attractive competitive move and appears to be ahead of competition when you look at Walgreens or even united Healthcare (although united has an astounding management track record and is beginning to dip their toe into this market, CVS is just more aggressive)
I think you touched on small microcosm of the problems with this firm . I agree with you.
Really enjoyed your analysis 🧐
After your video I decided to jump in and analyse the company myself.
Here's a few reasons I won't invest:
1. Their margins are very VERY low. Mainly on their main segment.
2. There's a huge chunk of short term obligations that are only payable by selling investory (that seems to be increasing yoy, so not really a good sign) or by getting even more debt.
3. Most of those short term obligations are operational. A lot of accrued expenses and payables. So it's a no go. I didn't even dive deeper.
Good luck anyway.
CVS will be around 30 years from now. CVS stock price 30 years from now will not be less than 72 dollars per share. Add-in dividends and it is a no brainer. Yet people are willing to buy truck loads of starbucks which is over priced by 40% 🤣🤣🤣 and a luxury item. Not a necessity to life.
Good analysis. Thank you!
i want to get it but all the times ive been at a cvs around my area and other areas im the only one there
It just got even cheaper! But when looking at TA, if this double top materializes, stock could easily go down to 44-50$ range😯
Great analysis. Unfortunately, CVS is down b/c of emerging competition, i.e., AMZ, and regulatory pressure to reduce cost of medical care & prescriptions. Additionally, Blue Shield of California intends to expand its pharmacy list, which will reduce CVS’s share of that business. So, the issues surrounding CVS relate to investor uncertainty about the future, not past performance. I’m a holder, mainly b/c of their incredible free cash flows, but I’ve stopped accumulating. If the rest of 2023 turns out okay, I’ll restart buying in 2024. Thanks for the great work👍🏾
One of the best stocks to buy today. Excellent analysis
Thank you. It’s gotten even cheaper
However, it seems the insider's are net selling and at least one big sale. From an article on yahoo James Clark sold 85% of his holdings.
with CVS I'm seeing a net profit margin of 1.19%. To me that's a big risk in this business. The money that's left at the end is tiny and with inflation still a thing, can be fluctuating lower even.
You need to start considering free cash flow margin, as that is pure cash margin that is being generated as a percentage of revenue. I would focus on free cashflow margin and price to free cash flow when analyzing CVS since it is a more stable and reliable measure than US GAAP based profit margin and P/E ratios. US GAAP profit includes write-offs and non-recurring items that usually won't show up in free cash flow, which in turn makes it hard to understand how a company is performing each year in comparison to prior years.
Is there any risk (beyond the numbers) the market is pricing ?
Hi Cam - been your fan since 2019 I think and have watched everyone of your videos. Amazingly, there’s always a new nugget of wisdom or two even after all these many videos. Thank you so much for putting such a stellar effort into educating lay persons like us - love the emphasis, the rigor and of course, the utter humility! The better half now knows not to disturb when she hears the now very familiar voice :)
Wouldn’t touch them as there are superiors retailers out there imho. Costco treats pharmacy department well and CVS controls prices and is predatory. I think Walgreens goes out of business first though. Many Generics at Costco are actually cheaper than using your insurance of any kind at CVS. It’s massively high priced.
Only 1/3 of their revenue is retail pharmacy. They are also 1/3 an insurance company and 1/3 a PBM. Not a worthwhile comparison to Costco. Also, when I want to run in real quick to a pharmacy chain to buy a random OTC drug, the last place I want to go to is Costco and park in a parking lot of 1,000 cars, walk through a mob of shoppers across a massive store to get to their drugs.
Costco definitely provides value for retail pharmacy but it's not comparable to CVS's retail.
I watched your video twice now. As mentioned in my other comment I love it. As a recommendation I would ask that you factor in the stock's daily ATR value (in %). CVS has an ATR of 1.7% per day. That means in order for it to appreciate significantly it's going to take a while. Are there other stocks with 3-5% ATR per day that pose great value? I know you're long term but many here are not. So if we can overlap on somethings then great. We get a trade (we add our TA work for timing) and you get your investment. Otherwise such stocks are too slow imo. Your call obviously. Peace.
Thanks for watching. I appreciate the feedback, I just look for interesting companies and let the traders trade. :)
Thanks!
Cameron - Thank you so much for the quality content you make. I really enjoyed your explanation about how CVS encapsulates each store in its own LLC for rent liability insulation.
Sure Hope You Are Correct. I Bought Today, On The Selloff 21,625 shares at $70.335 average per share.
Yeh, really did spend over 1.5 Million on this today.
ouch!!
Great video. Can you do an update video on Magna International? Sentiment around the auto industry seems to be quite negative. It would be interesting to look at BorgWarner as well. They missed earnings expectations by a cent and the stock collapsed 10 percent today. This is despite them raising guidance for the rest of the year.
Hey Cameron can you do an analysis on PFE Pfizer please.
there is an old show Taxi, with Andy Kaufman, he always said Ebitda in his foreign language, wonder if he was a trader.
Hi there Cameron, I really like your content; it's on point and very informative 🔥🔥. Do you have a biz' mail and are you open for feedback? I just want to share my thoughts regarding on your videos if that's okay with you.
love your channel. thanx
Great video as always
Intrinsic value shows its at least 60% undervalued according to the "Graham Calculator"
Next stock request: Intuit (INTU)
CVS IS BEGINNING TO RUN!! $TFC has next IMO
Also wouldn’t mind seeing Tyson foods $tsn
LET'S GET TO WOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOORK
Very thin operating margins though!
bought :))
Love the channel! But would really love your help with an insurance/re-insurance company. Arch Capital Group Ltd. (ACGL)
Hi Cameron, thanks for your wonderful analysis. I think doing a sector analysis will give the audience more insight rather than individual stock pick. like in the case with CVS, with CVS being undervalued, you see valuations of Aetna being free(BOGO). But overall CVS is losing is widespread moat of being its own PMB(CVS also own PBM CVS caremark) because the retail pharmacy in general is losing profitability. Multiple front drug pricing regulations, competition, e-commerce threats and automation does not bode well for the retail pharmacy sector as whole.
Don’t under estimate their infrastructure. Thanks for watching and commenting
As a Canadian, would it be ideal to buy the CAD hedged version of the stock?
Depends entirely on your views of usd/cad fax rate.
Better to hold USD and diversify in terms of currency. Also, over the long term the USD is more likely to outperform CAD
@@heavyduty5125 Thanks!
The site I'm looking at shows CVS to have a PE(TTM) of 22.46 and a FWD PE of 7.88. Does this make any sense? Are earnings really expected to nearly triple in one year? Where do these forward estimates come from that make up FWD PE?
They had big expense this year that they do not expect it will reoccure. If it does not reoccure EPS will return to previous numbers and PE will contract
Can you do a video in which we could calculate the five key attributes using the free seeking alpha screens?
Sell WBA and buy CVS.
THE GOAT!!!
How’s the sale going?
Great work, was just looking at this company, already owned buying more
As always great analysis! Deep dive and valuable information. All the best from Brazil!
Good luck. I am also looking forward to buy this CVS. Hahaha from Korea.
their debt is well over 60B now according to the latest 10q. Where did you get the ebitda data? seems a little off
I'd like to point out an error in the math. If you compound 25% annually for 10 years, you get $70*(1.25^10) = $651 per share. To get $156 in 10 years, it means that IRR is only 8.34%! Verify by calculating $70*(1.0834^10)=$156. I'm a big fun of your work, we all make mistakes.
You’re only looking at the share price but forgetting the cash flows annually. The IRR looks at the entire business. That’s what you’re buying
Put the numbers with cash flows into excel and use the =IRR function
Then read up on time weighted returns
They paid 69 billion for the acquisition. But that is the price they paid. I am curious to know what value they got.
As this is an entry into further due diligence, the first thing l would be doing is attempting to value that acquisition. Did they pay a fair price? Overpay? Got it cheap?
Unless the above can be answered conservatively, it's not a selling point.
All the other fundamentals are interesting though, enough to warrant exploring and answering the above.
Love the explanation on the capital leases and debt. Very good video. I appreciate the channel.
Great job done as always !!