"The first cut is the deepest!" Here's my early spin on Q4 and FY12 results:
The most telling commentary is the following: "The company intends to account for its 45 percent investment in Alliance Boots using the equity method of accounting on a one-month lag basis. Because the closing of this investment occurred within one month of the company's fiscal year end, the results of operations of Alliance Boots GmbH are not reflected in the company's reported net earnings for the fiscal quarter or year ended Aug. 31, 2012." Very interesting tactic.
It appears to me that Walgreens M&A, which further muddles the Q4 earnings per share comps with last years sale of WHI, renders traditional forward projection metrics meaningless. I say this largely because 55% of A/B still hangs in the balance and can continue to obfuscate comps as the remaining portion of the acquisition can and likely will be timed to make traditional EPS comparisons nearly impossible. It appears that WAG has groomed the books for a plus to forward EPS, but I just can't say for sure with so much GAAP garbage to navigate.
Thus, guys, S/P momentum all boils down to conviction in the business plan. I thought the numbers in today's release were fairly decent... perhaps better than I expected... and I was surprised when WAG opened down so much. It has since recovered somewhat. But I don't see a lot of S/P movement likely here for quite some time, other than moving with the market or with other news. Consequently I will not be opening a new position in Walgreens until there is more to go on and until some time has elapsed where the impact of extreme M&A (for a formerly conservative management enterprise) can actually be reflected in an apples vs. apples comparison.
The divvy, here, is small compared to other opportunities and I do question any further increases based on the added debt WAG is assuming to purchase A/B.
GLTA,
Yank
