CVS Sees 59% Profit Increase, Beats Estimates

Drugstore chain CVS Corp. (CVS) Thursday said fourth-quarter profit jumped 59 percent, boosted by strong sales growth and the reversal of tax reserves.

The company also said sales at stores open at least a year, a key measure of retail performance, rose 5.4 percent in January.

Fourth-quarter profit rose to $406.4 million, or 48 cents per share, from $255.1 million, or 30 cents a share, a year earlier.

CVS said it reversed $52.6 million of previously recorded tax reserves during the quarter, which generated a noncash benefit of 6 cents per share. The quarter also included a 1 cent per share benefit due to a litigation settlement.

Analysts, on average, had expected CVS to earn 40 cents per share before one-time items, according to Reuters Estimates.

Sales jumped 9.1 percent to $9.7 billion, Woonsocket, Rhode Island-based CVS said in January.

CVS currently ranks behind rival Walgreen Co. (WAG) in terms of revenue but has more stores. Sales at CVS should get a bump in the middle of the year, when the company completes its acquisition of about 700 Sav-on and Osco drug stores from Albertsons Inc. (ABS).

CVS trades at about 20.3 times estimated 2006 earnings, while Walgreen trades at a multiple of about 24.9, according to Reuters data.