CVS Without Tobacco Is Still CVS
NEW YORK (TheStreet) -- CVS Caremark
But should it win applause from investors?
If the company's estimate of $2 billion in tobacco sales per year is accurate, the company is sacrificing 1.6% of its total annual take of $123 billion to this decision.
That could mean a significant hit to its annual top-line growth, which averages about 10% per year.
For the first three quarters, the company had sales of nearly $94 billion, and it reports fourth-quarter sales on Feb. 11. Analysts are expecting CVS to report fourth-quarter revenue of about $32.7 billion and earnings of $1.11 per share.
CVS seems willing to sacrifice annual top-line growth in the future in hopes of a "halo effect" it can use against rival Walgreens
Walgreens has in the past sold its own private label pipe tobacco, and even protested against a San Francisco decision to ban tobacco sales in pharmacies, saying that would keep it from counseling people against smoking.
WATCH: Jim Cramer: How to Play CVS Kicking the Tobacco Habit