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Hype Asset of the Day | August 31st, 2022

Updated: Sep 6, 2022



CVS Health Corporation (NYSE: CVS)

CVS Health Corp (CVS Health) is a provider of health care and retail pharmacy services. It is an American company that owns CVS Pharmacy, a retail pharmacy chain; CVS Caremark, a pharmacy benefits manager; and most recently Aetna, a health insurance provider, among many other brands. With its strong foundations and financial indicators, the company has seen an increase in mentions by 78% over the last day, prompting investors to wonder if it's a good time to invest in the company now. Currently, CVS shares trade at $98.80 per share.



Positive Hype

There’s an abundance of reasons why you should consider adding CVS Health Corporation to your portfolio, here are some of them.


  • In the second quarter, CVS reported revenue of $80.6 billion, up 11% year over year, with EPS of $2.23, up 6% over the same period last year.


  • The revenue growth was seen across segments, and its total medical membership stood at 24.4 million, up 1% from the prior-year period.


  • CVS has grown annual revenue by 137% over the past 10 years and annual EPS by 97%.


  • In the trailing 12 months, CVS has reported a profit of $8.2 billion on revenue of nearly $308 billion, for a profit margin of only 2.7%.


  • The company increased its quarterly dividend late last year by 10% to $0.55 per share, its first increase since boosting its dividend from $0.42 to $0.50 in 2017.


  • CVS Health has maintained a conservative cash dividend payout ratio of 17.5%, which means there's plenty of room for growth.


  • The dividend has a current yield of around 2.18%, and the stock's P/E ratio is a low 16.5 which is an attractive combination for investors.


  • Healthcare Benefits and Pharmacy Services both saw double-digit growth in revenue, and are more stable than others, considering medicine is not a sector people can cut back on regardless of market conditions.


  • Year to date, shares of CVS are up around 4%, which is impressive given that the S&P 500 has declined by 10%. Its dividend yield of 2.1% is also better than the S&P 500 average of 1.5%.


Negative Hype

No company is perfect, and CVS Health Corporation isn’t an expectation to this rule. Here’s one reason that it might not do as well in the immediate future.


  • Acquiring Aetna caused CVS Health to pause raising its dividend payout for a few years, and took a small and temporary hit on profits too.


Conclusion

In good times or bad, though, CVS is a steady earner with a dependable dividend, which makes it a great stock to buy in a market pullback. If its bottom line doesn't take much of a hit, this could end up being a net positive for CVS, as at the very least, getting into primary care should drive stronger sales numbers. Additionally, the company has a record of strong financials and is part of an integral industry that’s relatively immune to the recession. With the recent drop in price, CVS is a stock worth considering taking a position in now.





HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.




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