Should You Imitate the Insider Buying at Walgreen Company (WAG)?

The closest peers for Walgreen Company (NYSE:WAG) are CVS Caremark (NYSE:CVS) and Rite Aid (NYSE:RAD). The trailing P/Es at these two companies are in the 19-20 range, meaning that Walgreen Company (NYSE:WAG) is priced at only a small premium. CVS experienced growth on both top and bottom lines last year compared to 2011, and the sell-side expects these improvements to continue as its forward earnings multiple is even with Walgreen Company (NYSE:WAG)’s at 13. Rite Aid hasn’t been doing as well- sales have actually been down significantly- and with its stock price rising strongly in its last year it is now at the point where it looks like a less interesting value investment. It is also much smaller than CVS or Walgreen Company (NYSE:WAG) in terms of market capitalization.

Wal-Mart (NYSE:WMT) has also been moving into the pharmacy business, and we can also compare Walgreen to Express Scripts as a related company. Wal-Mart had decent numbers in its last quarterly financials, but reports have suggested that the discount retailer is doing much worse in the current fiscal quarter. Analyst consensus has it with a forward P/E of 13 as well. Express Scripts is actually priced lower than level if you either annualize its most recent quarter or look at earnings estimates for 2014. Operations seem to have returned to normal and it might be a value play.

This insider purchase is interesting, and may be worth remembering as the drug stores report their results, but at this time Walgreen doesn’t seem to have been doing too well in terms of its business when we consider where the stock is trading. Express Scripts seems like a more interesting company for value investors to research further.

Disclosure: I own no shares of any stocks mentioned in this article.