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Tickers in this Article: CVS
When CVS Caremark (NYSE:CVS) releases its second quarter earnings on Tuesday, August 7, 2012, it is expected to report earnings that are up 21.5% from a year ago. The consensus estimate is 79 cents per share, up from earnings of 65 cents per share a year ago.

A business' earnings are the main determinant of its share price because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run. SEE: Can Earnings Guidance Accurately Predict The Future?

What to Expect: The consensus estimate has risen from 78 cents three months ago but is unchanged from 30 days ago. Analysts are projecting earnings of $3.29 per share for the fiscal year.

CVS is expected to report revenue of $30.98 billion for the quarter, beating last year's figure of $26.63 billion by 16.3%. Revenue for the fiscal year is expected to come in at $122.78 billion.

Company Performance: Over the past four quarters, CVS has reported double-digit revenue growth. The average revenue increase has been 14%. The most recent quarter marked the biggest jump of 19%.

Relative to the industry P/E ratio of 26.48, CVS' 17.0 is low. Companies with low P/E ratios may find it easier to surprise the market to the upside, even if their financial performance is not as strong as that of companies with high P/E ratios. The P/E ratio has been used for ages by analysts and still remains one of the most relevant pieces of stock valuation. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

The stock price has fallen 1.3% to $44.84 from $45.42 since May 4, 2012. CVS' worst recent stretch was when its stock price fell $3.18 per share between July 18, 2012 and July 19, 2012.

The Competition: CVS Caremark provides prescriptions and related health care services and products. Analysts are optimistic about CVS, with 15 of 18 assigning it a buy rating. This rating has been steady for the past three months.

The company's closest competitor in the retail (drugs) industry is Walgreen (WAG). Analysts are more optimistic about CVS than about Walgreen. Only seven out of 18 analysts rate the latter a buy.

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