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NEW YORK (TheStreet) -- Rite Aid (RAD) - Get Rite Aid Corporation Report shares were up an impressive 24% as of 3:35 p.m. EST, due in large part to unexpectedly strong second-quarter figures.

During the second quarter ended Aug. 31, the drugstore chain reported net income of $32.8 million, up $71.6 million on the year-ago quarter. This marks the fourth consecutive quarter in the black. Same-store sales grew 1% across the 4,600-strong store network.

In a conference call to investors, Rite Aid CEO John Standley credited generic medications adding to pharmacy gross margins and strong expense control as key drivers for the positive balance sheet.

Rite Aid revised its 2014 fiscal guidance in light of its better-than-expected second-quarter earnings. It is anticipated adjusted EBITDA will be $1.24 to $1.3 billion, net income $182 to $268 million, and sales $25.1 to $25.3 billion for 2014.

"We believe we have an operational game plan that will succeed in meeting the unique needs of our customers while positing Rite Aid for long-term success," said Kenneth Martindale, Rite Aid President and Chief Operating Officer, during the call.

Major competitors Walgreens (WAG) and CVS Caremark (CVS) - Get CVS Health Corporation Report will report quarterly earnings in October and November respectively.

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Thus far, 102.37 million shares of Rite Aid changed hands compared to its average daily volume of 15.9 million shares. Overall, Rite Aid is leading the S&P 500 which is down 0.16%. 

TheStreet Ratings team rates Rite Aid as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate Rite Aid (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 solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."

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

  • Powered by its strong earnings growth of 400% and other important driving factors, this stock has surged by 170.67% 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.
  • Rite Aid reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, Rite Aid turned its bottom line around by earning 12 cents vs. -42 cents in the prior year. This year, the market expects an improvement in earnings (14 cents vs. 12 cents).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 2.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The gross profit margin for Rite Aid is currently lower than what is desirable, coming in at 30.55%. Regardless of Rite Aid'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 1.42% trails the industry average.
  • Net operating cash flow has decreased to $184.45 million or 49.27% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Written by Keris Alison Lahiff.