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Rite Aid (RAD) to Report Q2 Earnings: What's in the Offing?

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Rite Aid Corporation is scheduled to report second-quarter fiscal 2021 results on Sep 24, before the opening bell. In the last reported quarter, the drugstore retailer delivered an earnings beat of 92.6%. Notably, the company has an earnings surprise of 414.5%, on average, for the trailing four quarters.

The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings is pegged at 11 cents, which indicates an 8.3% decline from the year-ago quarter. Notably, the consensus mark has been stable in the past 30 days. For revenues, the consensus mark is pegged at $5.76 billion, suggesting growth of 7.3% from the year-ago quarter’s reported figure.

Factors to Note

Rite Aid’s decision to keep stores open and enhanced digital capabilities to provide essential services to customers has been aiding performance amid the coronavirus outbreak. Solid growth in prescription deliveries, driven by free home delivery services as well as a sturdy performance at Elixir, has also been contributing to growth.

Rite Aid Corporation Price and EPS Surprise

 

Rite Aid Corporation Price and EPS Surprise

Rite Aid Corporation price-eps-surprise | Rite Aid Corporation Quote

Apart from the free home delivery of eligible prescriptions, the company has been offering pick-up services for prescriptions and over-the-counter products, while customers can use the drive-through option at more than 50% of its retail locations. Moreover, it has been progressing well with the rollout of the Buy Online Pickup In Store initiative, which has been offering better drive through and curbside pickup options.

Also, Rite Aid has expanded the Instacart delivery facility to more than 2,400 locations and received positive feedback for the same. The surge in demand for Tele Health in the wake of the COVID-19 outbreak has led the company to accelerate the launch of Rite Aid Virtual Care. Gains from all these initiatives are likely to have aided the top line in the fiscal second quarter.

Moreover, management has remained focused on strengthening its foothold in mid-market PBM, bringing innovation across its retail and mail-order pharmacy channels, enhancing the in-store experience by digital offerings, improving merchandises and rebranding its image with a new logo. Notably, the company has been witnessing a significant uptick in PBM, in terms of mail orders, as customers are increasingly hoarding 90-day refills in the wake of the COVID-19 outbreak. Alongside this, rising demand for prescription files is likely to help the company double its pharmacy business in the near term.

Apart from these, it has been investing in the expansion of EnvisionRxOptions (which is to be renamed Elixir), especially its services, technologies and clinical offerings. The company has also partnered with UNFI for introducing the Wild Harvest brand in Rite Aid stores. Such well-chalked endeavors have been boosting its wellness offerings.

However, it has been witnessing weak adjusted EBITDA for the past few quarters, which is expected to have been a threat to the bottom line in the quarter under review. In its last reported quarter’s earnings call, it anticipated adverse impacts on acute prescription volumes, SG&A expenses and Pharmacy Services Segment memberships to hurt its near-term results.

What the Zacks Model Unveils

Our proven model does not conclusively 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.

Rite Aid has a Zacks Rank #3 but an Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Darden Restaurants, Inc. (DRI - Free Report) has an Earnings ESP of +108.96%. It has a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +1.20%. It currently carries a Zacks Rank #2.

CarMax, Inc. (KMX - Free Report) currently has an Earnings ESP of +16.97% and a Zacks Rank #3.

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