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Rite Aid (RAD) to Report Q2 Earnings: What Should You Know?

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Rite Aid Corporation (RAD - Free Report) is scheduled to report second-quarter fiscal 2022 results on Sep 23, before the opening bell. The Zacks Consensus Estimate for its fiscal second-quarter revenues is pegged at $6.25 billion, suggesting a 4.4% increase from the prior-year quarter’s reported figure of $5.98 billion. The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at a loss of 42 cents, whereas it reported earnings of 25 cents in the year-ago quarter. The consensus mark has been unchanged in the past 30 days.

In the last reported quarter, the drugstore retailer’s earnings beat estimates by 72.7%. The company has an earnings surprise of 1,075.3%, on average, for the trailing four quarters.

Key Factors to Note

Rite Aid has been gaining from the expansion of delivery services to customers. Some notable efforts include free-of-charge home delivery service with an eligible prescription, pick-up services, drive-through for prescriptions and over-the-counter products, Buy Online Pickup In Store initiative, and curbside pickup options.

Rite Aid also expanded the Instacart delivery service and made partnerships with Amazon, Postmates and Instacart for home delivery, which have been contributing to digital sales growth. The company partnered with DoorDash and Shipt to offer same-day delivery of non-prescription health, convenience and wellness essentials. Rite Aid made collaboration with ScriptDrop to expedite the prescription delivery process. Such endeavors should have aided fiscal second-quarter results.

The company is progressing well with its efforts to strengthen the foothold in mid-market PBM by innovation across its retail and mail-order pharmacy channels, enhanced in-store experience, curated digital offerings, improved merchandise, and rebranded image with a new logo. Rite Aid’s newly launched Stores of the Future and the acquisition of Bartell are likely to have helped expand the customer base. Alongside these, its RxEvolution strategy is expected to have aided it.

However, the company has continued to witness elevated expenses due to a rise in wages and increased investments to drive revenues. This is likely to have persisted in the quarter under review. Sluggishness in front-end same-store sales, owing to lower demand for general cleaning products, sanitizers, wipes, paper products, liquor, and over-the-counter products, is expected to have acted as a deterrent. With the pandemic slowly fading away, lesser cases of cough, cold, and flu are expected to have been limited in the fiscal second quarter.

Rite Aid Corporation Price and EPS Surprise

 

Rite Aid Corporation Price and EPS Surprise

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

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 and an Earnings ESP of 0.00%.

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:

Costco Wholesale Corporation (COST - Free Report) currently has an Earnings ESP of +0.11% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Darden Restaurants (DRI - Free Report) has an Earnings ESP of +1.69%. It presently carries a Zacks Rank #3.

Walgreens Boots Alliance (WBA - Free Report) currently has an Earnings ESP of +2.15% and a Zacks Rank #3.