Comparing SSGs for Walgreen (WAG)

Walgreen (WAG), the retail drug store chain and mail-order pharmacy, has been recently SSGed by three NAIC gurus: Mark Robertson, the founder and general manager of ManifestInfesting.com, who conducted a workshop at StockCentral.com this month and used WAG as an example; Cy Lynch, who wrote an article about WAG in the January 2007 issue of Better Investing magazine; and Ann Cuneaz, a respected NAIC volunteer educator, who contributed her SSG to Mark’s recent workshop.

I thought it would be interesting to compare their SSGs along with my own, even though I’m no guru.

	Mark R	Cy L	Ann C	Armin
SSG Date	12-1-06	10-24-06	11-16-06	10-31-06
Sales Gwth Est in 5 yrs	12.00%	12.00%	11.50%	13.00%
EPS Gwth Est in 5 yrs	12.40%	13.80%	11.20%	14.00%
Proj Hi PE	31.5	30.0	26.0	30.3
Est Hi Price	$97.30	$98.10	$75.10	$98.50
Proj Lo PE	21.5	22.0	16.0	20.9
Est Lo Price	$32.00	$35.00	$30.20	$35.30
Up-Down	6.9	6.1	2.6	6.5
Total Return	19.7%	18.0%	12.5%	18.1%
SSG Price	$40.27	$43.87	$42.72	$43.68

- I conclude that WAG is a SSG Buy using reasonably conservative judgments, while Ann may have been a little too conservative as her $75.10 Estimated High Price is less than the low end of Value Line’s $80-100 estimate. I never want to substantially exceed or substantially fall below VL’s Estimated High Price, at least not without a good reason. Ann is below, but not substantially below VL.

- When I did my SSG,the analysts were estimating long-term EPS as follows: First Call @ 15.20% (11 analysts); Zacks @ 15.36% (10); Reuters @ 15.19% (13); S&P via NAIC @15.50%; and VL @ 17.00% (with 100% Earnings Predictability). Ann’s 11.20% EPS estimate was the lowest of the four SSGs and 4.3% less than the lowest of the five analyst estimates (S&P @ 15.50%).

- WAG has declined $3.25 per share since 7-28 and this price difference made a hugh difference in my SSGs. I used the same judgments in both SSGs, but my prior analysis showed a 13.4% Total Return and a 2.9 Upside-Downside Ratio which meant that WAG did not then satisfy the SSG Buy criteria. What a difference $3.25 per share makes!!

-Armin

ps: This post took an unusual amount of work to publish. Because Blogger does not have a Tables feature (a hugh negative), I had to create the table in Word as I don’t know HTML; then Blogger refused to accept 5 or so codes or tags that Word inserted and I had to delete them one-by-one; then Blogger made me chose a new template solely in order to regain the font and color commands; and I could not repeat this tedious process when I tried again to prepare for my next table. Grrrrrrr!!