The post-earnings decline will certainly draw attention from some who are looking to add businesses with relatively stable cash flows to their portfolio. Trailing EPS amounts to $2.04, giving the stock a 14.5x multiple; as with most stocks in the market, this is on the low end of the company's historical valuation range. One could also argue that the multiple is relatively cheap, since it is in-line with the market average and Walgreen's has grown book equity by 13% in the last year as many other companies have struggled. Walgreen's stock has normally traded at a premium valuation to the S&P 500, for example.

From a valuation standpoint, other metrics support that Walgreen's stock should be priced to deliver mid-to-high single digit annual returns. Still, the stock is not screamingly cheap, and as a retail company at just over 2x book value, there is downside that could easily be realized. The book multiple is not my main concern, however.

With the market set to digest earnings, companies need to demonstrate that "green shoots" can be found outside a salad bar. Miss earnings, and you risk being in the investment community penalty box until the next quarter, at the least. This can be complicated by a shareholder base that is in flux, and can easily override long-term fundamentals with a supply/demand imbalance as buyers struggle to absorb all the shares being sold.

Walgreen's was once a growth stock, and sales grew from 12% to 16% annually this decade as the company rapidly expanded its store base. Now, Walgreen's is transitioning into a more mature company that is competing in a saturated market, and this is often more problematic from a standpoint of investor returns than is anticipated. Management's focus, as outlined in the earnings release, is increasingly on cost-cutting. Such programs take time to implement and see results from, and in the interim the growth-oriented fund managers who own the stock are likely to sell out their positions, to be replaced with more value-oriented fund managers.

All in all, this is not a recipe for huge gains. Walgreen's is a solid company, but one day where the stock is off 6% should not be enough to make investors overly greedy.

James Cullen also edits and writes at CollegeAnalysts.com. He has no position in the stocks mentioned above.