Today was an historic day for Walgreens and GE, but there is one loser. After 111 years, GE was dropped from the index. This doesn’t happen very often. The last company that was dropped was AT&T being displaced by Apple in March of 2015. Walgreens has experienced a lot of growth in recent years through acquiring US and foreign companies. The most recent domestic company purchase was 1,900 Rite Aid stores in March. That was only after an anti-trust measure blocked the purchase of a much larger number. At the end of 2014, Walgreens purchased UK and Swiss-based Boots Alliance. “The combined company has 12,800 stores in 25 countries employing more than 370,000.” Chicago Tribune It seems intent on getting bigger, as revenues and profit indicate executives have the expertise for successful M&As that not all companies do.
Why the Dow chose Walgreens Books Alliance (WBA) over other hugely successful corporations is interesting. “The Dow” is unique is how it tracks tops performers by share price and not market capitalization. CNN Money Walgreens is valued at $67/share and GE at <$14/share. And, it looks to appropriately “weight” its composite members by not trading stocks such as: Amazon (AMZN), Google (GOOGL), or Oracle (ORCL), that have large prices per share. CVS trades on NASDAQ at around $70/share. S&P Dow Jones Indices said that Walgreen was chosen as a drugstore company that would represent the large consumer and healthcare sections the US economy. Walgreen’s number one competitor, CVS/Caremark (CVS), was not chosen to join the Dow and “the why” remains a mystery to most.