Will Walgreens Stock Rebound To Its Pre-Inflation Shock Level Of Over $50?

Walgreens stock (NYSE: WBA) currently trades at $22 per share, nearly 60% below the level seen in March 2021, and it appears undervalued. WBA stock was trading at around $38 in early June 2022, just before the Fed started increasing rates, and is now 40% below that level, compared to 18% gains for the S&P 500 during this period. This underperformance of Walgreens stock can be attributed to slowing sales growth, partly due to a decline in Covid-19 testing and vaccination demand. Its profitability has also been adversely impacted in the recent past due to opioid-related settlements.

Interestingly, WBA stock has had a Sharpe Ratio of -0.6 since early 2017, which is much lower than 0.6 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.