Factors Setting the Tone for Rite Aid's (RAD) Q4 Earnings
Rite Aid Corporation RAD is slated to report fourth-quarter fiscal 2020 results on Apr 16. In the last reported quarter, the drug store retailer delivered adjusted earnings from continuing operations of 54 cents per share, which significantly beat the Zacks Consensus Estimate of 3 cents. Moreover, its bottom line beat estimates in three of the trailing four quarters.
The Zacks Consensus Estimate for the company’s earnings for the fiscal fourth quarter is pegged at a loss of 13 cents, whereas it reported a loss of 20 cents in the year-ago period. Estimates have been revised positively by a penny in the past 30 days. The consensus estimate for fourth-quarter sales is pegged at $5,659 million, indicating 5.2% growth from the prior-year quarter’s reported number.
Rite Aid Corporation Price and EPS Surprise
Rite Aid Corporation price-eps-surprise | Rite Aid Corporation Quote
Key Factors to Note
Rite Aid has been on track with its growth strategy, which includes EnvisionRxOptions PBM, enhancing front-end channels and transforming processes to deliver operational efficiency. Moreover, its efforts to improve customer experience through wellness remodels and improved distribution system should have bolstered its performance.
The company has been continuing to invest in the expansion of EnvisionRxOptions, especially its services, technologies and clinical offerings. Management is optimistic about its growth on EnvisionRxOptions as well as health and wellness offerings. Simultaneously, it has been focusing on remodeling wellness stores to increase its market share in an extremely competitive industry. Further, Rite Aid has shifted e-commerce fulfillment from a third-party provider to its distribution network to enhance the customer experience. This has reduced fulfillment lead time, lowered costs and helped increase online offering by 25%.
However, weak front-end sales have been hurting the company’s top line over the past few quarters. Softness in tobacco, owing to regulation changes that restricted selling tobacco in some New York stores, and in over-the-counter cough-cold and flu products have been affecting front-end performance. Due to lower front-end same-store sales, Rite Aid has been reporting weak adjusted EBITDA for a while. It expects the same trend to continue throughout fiscal 2020. This coupled with projections of lower prescription reimbursement rates might have hurt the company’s performance in the to-be-reported quarter.
Zacks Model
Our proven model does not predict an earnings beat for Rite Aid this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Although Rite Aid carries a Zacks Rank #2, its Earnings ESP of 0.00% makes surprise prediction difficult.
Stocks Poised to Beat Earnings Estimates
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Helen of Troy Limited HELE has an Earnings ESP of +0.78%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tractor Supply Company TSCO has an Earnings ESP of +0.26%. It has a Zacks Rank #3 at present.
Kimberly-Clark Corporation KMB currently has an Earnings ESP of +1.17% and a Zacks Rank #3.
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