Rite Aid (RAD) Stock Gains on Same-Store Sales Growth

NEW YORK (TheStreet) -- Shares of Rite Aid (RAD) were gaining 2.8% to $5.61 Thursday after the drug store operator reported its same-store sales for November and the third quarter.

Rite Aid reported that same-store sales grew 5.4% in November, above the 4.1% same-store sales growth analysts surveyed by Thomson Reuters expected. Total sales for November grew 5.1% from the year-ago month to $6.65 billion.

Pharmacy sales increased 7.1% in November, and prescription counts increased 4.2% in the month.

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Same-store sales increased 5.4% for the quarter that ended Nov. 29, with front-end same-store sales increasing 1.6% and pharmacy same-store sales increasing 7.2% in the quarter. Prescription counts increased 4.5% in the quarter.

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 revenue growth, good cash flow from operations and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."

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

  • RAD's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • RITE AID CORP 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 CORP increased its bottom line by earning $0.22 versus $0.12 in the prior year. This year, the market expects an improvement in earnings ($0.28 versus $0.22).
  • The gross profit margin for RITE AID CORP is currently lower than what is desirable, coming in at 30.60%. 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 1.96% trails the industry average.
  • In its most recent trading session, RAD has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • You can view the full analysis from the report here: RAD Ratings Report

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