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CVS Health Corporation Stock Price is Trading At Discount

CVS Health Corporation (NYSE: CVS) stock price is trading well below from 52-weeks high of $82. Although the stock price stabilized slightly in the past couple of months, the shares are down 17% in the past twelve months.

CVS shares are currently trading around $62, up slightly from 52 weeks low of $51. The financial numbers are offering strong support to CVS Health Corporation stock price. In addition, its dividend growth is safe despite sluggish share price performance.

CVS CVS Health Corporation daily Stock Chart

Financial are Supporting CVS Health Corporation Bullish Trend

The company generated second-quarter revenue of $63.4 billion. This represents a growth of 35% from the previous year period.

CVS Health Corporation Stock...

The revenue growth is driven by its recent acquisition of Aetna Inc. Its revenues also received support from increased volume and drug price inflation in both Retail/LTC segments and the Pharmacy Services.

On top, the company has generated a 55% growth in operating income. The robust growth in earnings has enhanced its cash generation potential.

CVS has raised its outlook for the full year following stronger than expected second-quarter results. The company anticipates full-year adjusted operating income in the range of $15.2 billion to $15.4 billion compared to the earlier estimate for $15.0 billion to $15.2 billion

Dividends are Safe

CVS currently offers a quarterly dividend of $0.50 per share, yielding above 3%. Its dividends are completely safe. Indeed, the substantial growth in cash flows offers a room for a dividend increase.

CVS Health Corporation Stock...

CVS Health Corporation expects to generate $10.6 billion in operating cash flows while the dividend payments are likely to stand around $2.6 billion. Strong cash flow offers a gap for a dividend increase. In addition, the company appears in a position to invest in both organic and non-organic growth opportunities.

Overall, CVS Health Corporation stock price is receiving support from numerous catalysts. The substantial growth in revenues along with strong cash generation potential is among the biggest catalysts. Therefore, analysts are suggesting dividend investors buy CVS Health Corporation stock following the dip.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.