NEW YORK (TheStreet) -- Rite Aid (RAD - Get Report) was rallying during Monday's session despite the absence of market-moving news. The drug retailer was up 4.5% to $5.81 by early afternoon, adding to an overall 327.2% gain over the year to date.
The moves indicate investors are feeling bullish ahead of the company's third-quarter results to be released Thursday before the bell. Analysts surveyed by Thomson Reuters expect the Camp Hill, Pa.-based business to report net income of 4 cents a share on $6.32 billion in revenue. During its second quarter ended August, the company posted net income of 3 cents a share on $6.28 in revenue.
TheStreet Ratings team rates Rite Aid Corp as a Hold with a ratings score of C. The team has this to say about their recommendation:
"We rate Rite Aid Corp (RAD) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Rite Aid Corp's revenue growth has slightly outpaced the industry average of 6.3%. Since the same quarter one year prior, revenues slightly increased by 0.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Powered by its strong earnings growth of 160% and other important driving factors, this stock has surged by 427.35% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- Net operating cash flow has significantly increased by 341.63% to $79.47 million when compared to the same quarter last year. In addition, Rite Aid Corp has also vastly surpassed the industry average cash flow growth rate of -54.43%.
- The gross profit margin for Rite Aid Corp is currently lower than what is desirable, coming in at 30.14%. Regardless of RAD's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.52% trails the industry average.
- You can view the full analysis from the report here: RAD Ratings Report