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“The Walgreen Company said Tuesday that its quarterly earnings climbed 10 percent but its shares tumbled and analysts said they expected more from the company, the largest drugstore operator in the nation. “ — New York Times, March 22
My wife and I own a few shares of Walgreens, believing it to be one of the more competently run corporations in America. That’s why I follow Walgreen’s on the business pages, which is why I read the news story above with a sense of déjà vu all over again.
“Mr. Jorndt's main task will be keeping Walgreen on its earnings track. On Wednesday, the company, based in Deerfield, Ill., reported its 15th consecutive year of record sales and earnings. But the company's stock has fallen sharply from its Tuesday close of $48.25, apparently because fourth-quarter results were below analysts' expectations. Walgreen shares dropped $1.25 each yesterday, to $45, on the New York Stock Exchange.” — New York Times, October 13, 1989.
“Another quarter of soaring prescription drug sales lifted the Walgreen Company to a 17 percent increase in profit in the second quarter, the company said Monday. Walgreen’s earnings came in slightly below Wall Street’s high expectations and its stock fell.” — New York Times, March 23, 2004
“The Walgreen Company reported a 13.7 percent increase in quarterly earnings Monday but missed analysts’ estimates….Walgreen’s shares fell $1.12, or 2.4 percent.” New York Times, March 29, 2005
“Walgreen, the drugstore chain, reported its quarterly profit rose about 1 percent after costs from Katrina. Excluding charges, Walgreen’s earnings of 35 cents a share still missed Wall Street estimates by 2 cents. Shares of Walgreen fell $1.01, to $41.50.” — New York Times, September 27, 2005.
“The Walgreen Company, the drugstore chain, posted a 25 percent increase in quarterly profit on Monday driven by strong sales of prescription medications, but its shares declined as earnings before unusual items fell short of expectations.” — New York Times, September 26, 2006.
Wall Street is a Tiger Mother. It is not enough for its children to do well. They must exceed expectations — and expectations are always high. Yes, there were quarters when Walgreens did exceed expectations and Wall Street rewarded it. Other times, however, Wall Street simply refused to be placated.
“The drugstore operator Walgreen Company said on Monday that its quarterly profit rose 20 percent, mainly because of higher sales of prescription drugs and flu shots. The company said that results, which topped Wall Street estimates, were helped by greater demand for flu shots in September and October and that its pharmacies were taking more market share….Shares in Walgreen, which is based in Deerfield, Ill., fell 3 cents, to $36.61 a share.” — New York Times, December 21, 2009.
Is Walgreens a high-achieving company because Wall Street keeps sending the message, whatever you do is not good enough! That’s how it looks to me. But is Walgreens happy? For that matter, am I happy? Walgreens shares are worth no more than they were worth ten years ago.