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VS CaremarkCVS

Executive Summary

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VS Caremark submitted its Annual report for the year ended December 31, 2012on February 15, 2013. For this analysis, we have taken this report from the company’s website. Hence all information and analysis in this report is based on the Annual report of the company for the year 2012, released on February 15, 2013.

CVS is the largest pharmacy health care provider in US. The company is reinventing pharmacy to offer innovative solutions to help the general public to move towards better health. Their continuous effort towards lower care costs has taken the company to operate more than 7,400 CVS/pharmacy stores, serving more than 60 million members. Hence CVS is nation’s largest retail medical clinic system, having more than 600 Minute Clinic locations.

The Financial Highlights of the company are as under:

2012 2011 % Increase

Net revenues $ 123,133 $ 107,100 15.0%

Operating profit $ 7,228 $ 6,330 14.2%

Net income $ 3,877 $ 3,461 12.0%

Diluted EPS $ 3.03 $ 2.59 17.1%

Stock price $ 48.35 $ 40.78 18.6%

Market capital. $ 59,527 $ 52,937 12.4%

Larry J. Merlo, President and Chief Executive Officer, has focussed on future growth of the company. The company believe in their business model is well aligned with longer term trends in the industry and uniquely positioned. The company’s growth plan is:

• First, we will create greater health care value byincreasing the convenience and quality of care; weare expanding and differentiating our services for better health at lower costs

• Second, we will serve new and existing customers innew ways; our teams from across the enterprise arefocused on identifying and targeting opportunities tobetter serve the fastest-growing customer segments.

• And third, we will optimize our enterprise assets by delivering innovative solutions that leverage ourunmatched breadth of capabilities

Company Profile

The company profile is as under;

*Ticker symbol CVS – NYSE

*Mission Statement as it is printed in the Annual Report

Helping people on their

path to better health

*Corporate headquarters location

One CVS Drive, Woonsocket, Rhode Island

Delaware

*Date of Incorporation

CVS Caremark Corporation was founded in 1892 and is based in Woonsocket, Rhode Island

*Public Auditor

Ernst & Young LLP – Boston,

Massachusetts

*Name of CEO

Larry J. Merlo

– President and Chief Executive Officer

*Name of CFO

David M. Denton

Executive Vice President and

Chief Financial Officer

*Stock classifications

The company has issued common stock and preferred stock. Both are appearing in the Balance sheet.

*Exchange

NYSE

*Dividends

2012 2011 2010

Common stock dividends (829) (674) (479)

Industry Profile

CVS Sector / Industry Membership

Sector: Services Industry: Drug Stores

Recommendation

The company is really working strong and well managed. The net income of the company is showing an increasing trend. The net income of the company has been:

Net income of CVS Caremark

For 2010 $ 3,427

For 2011 $ 3,461 Increased by 1%

For 2012 $ 3,877 Increased by 12%

Dividends per common stock share

The cash dividend per share has increased every year. It creates confidence among the stockholders. The cash dividends distributed as follows:

Cash dividends per common share

For 2008 $ 0.258

For 2009 $ 0.305

For 2010 $ 0.350

For 2011 $ 0.500

For 2012 $ 0.650

Total Assets

Total assets of the company has shown increasing trend and is increasing every year. Increase in total assets indicates the growth of the company. Increase in total assets are as follows:

For 2008 $ 60,960

For 2009 $ 61,641

For 2010 $ 62,169

For 2011 $ 64,543

For 2012 $ 65,912

Share price

The share price at New York Stock Exchange under the symbol “CVS” has shown a very high increase. In 2011 the average share piece was $41.35, which has gone up to $49.80 per share. It indicates the market position and investor’s confidence towards company’s shares.

In view of above the CVS Caremark is a good company for stockholders, investors and to a great extent to general public of USA.

Analyst Report_luanli_CVS Caremark1

Analyst Report – 1

2

5 points

(This assignment is to be completed individually)

Part 1: Executive Summary – 10 points

GOAL: For this section of the assignment you will have to succinctly summarize important information included in the annual report to provide the reader with a quick overview of the contents. Look at key findings from your report including financial information as well as industry information. Things that can be included – (these are just ideas include others if relevant): current financial information depicting health of organization, new products or markets, future growth opportunities. It is worth noting that an executive summary in business usually does not exceed one page, be clear and concise.

Part 2: Company Profile – 10 points

GOAL: For this section of the assignment you will have to locate pertinent company information contained in the annual report or on financial websites (example is finance.yahoo.com). Bullet pointing this information is appropriate for your report.

You will have to identify the following items that are specific to your company:

*Ticker symbol

*Mission Statement as it is printed in the Annual Report

*Corporate headquarters location

*Date of Incorporation

*Public Auditor

*Name of CEO

*Name of CFO

*Stock classifications (common, preferred, both?)

*Exchange (e.g.: NYSE, Nasdaq)

*Dividends (have they been issued and for how much)

Part 3: Industry Profile – 30 points

GOAL: For this section of the assignment you will have to locate pertinent company information contained on financial websites (
ONE
example is finance.yahoo.com).

· Identify the market sector to which your company belongs. Describe what a market sector is and list three industry leaders and three industry laggards in the sector

· Identify and define the industry to which your company belongs. Research and describe what specific characteristics must a company have to be in that industry

· Attach your company’s stock performance in comparison to your company’s two largest competitors stock performance over the past two years. Note on the graph three events. These can be company, industry or market specific events. In detail, describe the events and their effect on your company’s stock performance.

· Graph, using a pie chart, your company versus other companies (at least 3) in the industry with market capitalization data. Make observations and describe your observations.

· In detail, discuss the global presence of your company/industry. Identify three international elements that are critical to your company’s success & global presence.

Part 3: Current Events/Future Outlook – 30 points

GOAL: For this section of the assignment you will have to use business periodicals,
online sources, and the annual report to start to understand the relationship between
significant internal corporate events/external global events and company financial
performance. Deliverables in this section include:

1) Two relevant articles – one domestic and one global – on current events affecting either your company or your industry (or preferably both). Must be recent articles, within the past 12 months. Articles must be attached, not linked, to document, and you are required to summarize the event in your own words and why you found it important to incorporate into the report.

2) What is the outlook for the industry as well as your company in the next 1-3 years? What changes or trends will or may affect it? Cite specific examples you have read about.

Part 5: Recommendation – 30 points

GOAL: For this section of the assignment you will have to use your compiled data to justify an “educated guess” on investment suggestions. You will have to determine either “buy” or “don’t buy” and back up your suggestion with strong financial reasoning.

*You will have to identify strategies used for your analysis. Use at least three ratios, and two other sources of information you believe are relevant, to help you make your decisions. Explain what ratios you used and specify what information your choices provided. For example, did you use the Current Ratio? If so, why? What information did the Current Ratio provide that helped you determine the viability of investing in this company?

You will also need to compare this data (of your choice) to the same data of companies in your industries to support your recommendation. Comparison ratios can be found via online databases thru the Drexel Library as well as Google Finance, Yahoo! Finance and bloomberg.com

Overall appearance of the report including, but not limited to: proper citations, proper use of grammar/spelling, sentence structure, formatting of the cover page and body of the report, table of contents, page numbers, etc – 15 points

Analyst Report

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