Stock Analysis & Valuation Walgreens Boots Alliance, Inc. (W8A.DE)

• Previous Close: €10.28
• Sector Valuation Confidence Level: High

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	2.90	-72
Intrinsic value (DCF)	3.36	-67
Graham-Dodd Method		n/a
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Walgreens Boots Alliance, Inc. (WBA) is a leading global pharmacy-led health and wellbeing company headquartered in Deerfield, Illinois. Operating through three key segments—Retail Pharmacy USA, Retail Pharmacy International, and Pharmaceutical Wholesale—WBA serves millions of customers daily with a comprehensive range of healthcare, wellness, and beauty products. The company's extensive retail footprint includes well-known brands such as Walgreens, Duane Reade, and Boots, alongside proprietary health and beauty lines like No7 and Soap & Glory. With a workforce of 232,000 employees, WBA combines pharmacy services, retail clinics, and pharmaceutical wholesale operations to deliver integrated healthcare solutions. As part of the Medical - Pharmaceuticals industry within the Healthcare sector, WBA plays a critical role in both consumer health and pharmaceutical distribution, positioning itself as a key player in the evolving healthcare landscape. The company's diversified business model and strong brand recognition make it a significant entity in global healthcare retail and distribution.

Investment Summary

Walgreens Boots Alliance presents a mixed investment profile. On one hand, its extensive retail network and strong brand equity in the pharmacy and health retail space provide a stable revenue base. However, the company reported a significant net loss of -€8.636 billion in the latest fiscal year, with diluted EPS at -€10.01, reflecting operational and financial challenges. The company maintains a modest dividend yield (€0.50 per share), but high total debt (€32.852 billion) and negative earnings raise concerns about long-term sustainability. Positive operating cash flow (€1.018 billion) suggests some liquidity, but capital expenditures (€-1.381 billion) indicate ongoing reinvestment needs. Investors should weigh WBA's market position against its financial health and sector headwinds, including competitive pressures and regulatory changes in healthcare.

Competitive Analysis

Walgreens Boots Alliance operates in a highly competitive landscape, facing rivals across retail pharmacy, healthcare services, and pharmaceutical wholesale. Its competitive advantage lies in its extensive retail footprint, strong brand recognition (Walgreens, Boots), and vertically integrated model combining retail, clinics, and wholesale. However, the company faces intense competition from CVS Health, which has a larger market cap and a more diversified healthcare services portfolio, including Aetna insurance. Amazon Pharmacy's disruptive e-commerce model also poses a threat to WBA's retail dominance. In international markets, WBA competes with companies like Tesco and Alliance UniChem, though its Boots brand retains strong UK consumer loyalty. The company's wholesale segment competes with McKesson and AmerisourceBergen, which have larger scale in pharmaceutical distribution. WBA's ability to integrate digital health solutions and optimize its cost structure will be critical in maintaining competitiveness against these players. The firm's recent financial struggles highlight vulnerabilities, but its established infrastructure and customer base provide a foundation for recovery if operational efficiencies improve.

Major Competitors

• CVS Health Corporation (CVS): CVS Health is a dominant competitor with a broader healthcare ecosystem, including pharmacy benefits management (Caremark) and insurance (Aetna). Its integrated model provides stronger margins and diversification than WBA's retail-heavy approach. However, CVS faces similar pressures from Amazon and regulatory scrutiny in healthcare services.
• Amazon.com, Inc. (AMZN): Amazon Pharmacy disrupts traditional retail pharmacy with its e-commerce platform and Prime membership benefits. While lacking physical stores, Amazon's logistics network and pricing power challenge WBA's retail margins. WBA's in-person healthcare services (e.g., clinics) remain an advantage, but Amazon's digital convenience is a growing threat.
• McKesson Corporation (MCK): McKesson is a leader in pharmaceutical wholesale, competing with WBA's Alliance Healthcare segment. McKesson's larger scale and focus on distribution give it cost advantages, but WBA's combined retail-wholesale model offers downstream integration. McKesson lacks WBA's consumer-facing retail presence.
• AmerisourceBergen Corporation (ABC): AmerisourceBergen is another major pharmaceutical wholesaler with a strong global footprint. Like McKesson, it competes with WBA's wholesale business but does not operate retail pharmacies. WBA's partnership history with AmerisourceBergen adds complexity to their competitive dynamic.
• Rite Aid Corporation (RAD): Rite Aid is a smaller retail pharmacy chain with a struggling financial position. While it competes directly with WBA's Walgreens stores, its limited scale and bankruptcy risks make it a weaker competitor. WBA's brand strength and operational scale overshadow Rite Aid in most markets.
• Tesco PLC (TSCDY): Tesco competes with WBA's Boots segment in the UK through its in-store pharmacies and health/beauty offerings. Tesco's larger grocery footprint gives it customer traffic advantages, but Boots' specialized health and beauty focus retains a loyal niche. Tesco's pricing power is a ongoing competitive pressure.