NEW YORK (TheStreet) -- Rite Aid (RAD) - Get Report shares are down 1.04% to $8.86 in afternoon trading on Wednesday ahead of the release of the retail drug store chain's first quarter financial results before the opening bell tomorrow.

The Camp Hill, PA-based company is expected to report earnings of 3 cents per share, one cent lower than the 2 cents per share the company reported in the year ago period.

Revenue for the period is expected to increase to $6.65 billion from $6.47 billion.

TheStreet Ratings team rates RITE AID CORP as a Hold with a ratings score of C. TheStreet Ratings 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 notable return on equity, revenue growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to other companies in the Food & Staples Retailing industry and the overall market, RITE AID CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • RAD's revenue growth has slightly outpaced the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 3.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for RITE AID CORP is currently lower than what is desirable, coming in at 30.13%. RAD has continued with the weak profit margin when compared to the same quarter of last year. Despite the mixed results of the gross profit margin, RAD's net profit margin of 26.79% significantly outperformed against the industry.
  • Net operating cash flow has declined marginally to $175.00 million or 9.85% when compared to the same quarter last year. Despite a decrease in cash flow RITE AID CORP is still fairing well by exceeding its industry average cash flow growth rate of -25.59%.
  • The debt-to-equity ratio is very high at 98.94 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
  • You can view the full analysis from the report here: RAD Ratings Report