Is Walgreens Boots Alliance a Buy Heading Into Earnings?

One stock investors will want to keep an eye on this week is Walgreens Boots Alliance (NASDAQ:WBA). -- it reports earnings on Oct. 14. The healthcare stock has slightly outperformed the S&P 500 this year, rising 19% while the index has jumped by 17%. How it does this quarter will undoubtedly depend on how much of a lift it gets from COVID-related traffic. Last quarter, the company delivered a fantastic earnings beat where sales of $34.03 billion came ahead of analyst expectations of $33.76 billion. And its adjusted earnings per share of $1.51 were also far better than Wall Street projections of $1.17. However, investors remained concerned that the bump up in traffic wouldn't last as COVID-19 case numbers come down.

In seven of the past 10 earnings reports, Walgreens has beaten expectations on both the top and bottom lines. But that hasn't always sent shares of the retail pharmacy giant soaring.

The good news is that there is still plenty of growth ahead for the business and reason to be bullish on the stock over the long term. Walgreens has partnered with VillageMD and the two companies are on track to open 600 primary care clinics in the country in the next four years.

Walgreens is an underrated stock, trading at a forward price-to-earnings multiple of less than 10. While there are challenges ahead for the company (e.g. online competition), buying before earnings could be a great move as the pandemic is still a problem and Walgreens likely continued to get a boost from vaccine-related traffic at its stores this past quarter.