AbbVie and CVS: trailing P/E ratios look high, but forward ratios appear low
AbbVie and CVS have high trailing P/E ratios based on recent results, at 100times or more and 42times, respectively. By contrast, their forward P/E ratios are listed at 15times and 13times, respectively, leading to an analysis that they appear relatively undervalued based on forward earnings.
AbbVie and CVS Health appear overvalued based on their recent financial metrics. AbbVie’s trailing P/E ratio is 100times or more, while CVS’s trailing P/E ratio is 42times. These figures are surface-level indicators that reflect recently reported net income appearing low.
By contrast, the forward P/E ratios of the two companies are listed at 15times and 13times, respectively. The forward P/E ratio is a metric based on the future earnings the market expects. It reflects the possibility of an earnings recovery ahead.
The two companies reported some one-time costs and non-recurring items in recent quarters. These items lowered recent earnings, contributing to higher trailing P/E ratios. One-time items are classified as temporary expenses in accounting.
Both companies pay dividends. Their dividend yields were also described as relatively solid. Key indicators in their disclosed financial items were mentioned in a way investors may find noteworthy.
In summary, the difference between trailing and forward P/E ratios, along with recent one-time costs, is analyzed as having distorted the apparent valuations of AbbVie and CVS. Based on this rationale, the conclusion presented was that applying forward earnings could make both stocks look more attractive. Please consult each company’s disclosures and analyst estimates for specific figures.
Sources: The Motley Fool
Bullstory synthesized this report from the linked sources. AI may have assisted the writing process. Check the original reports for factual confirmation.