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Rite Aid (RAD) to Report Q3 Earnings: What's in the Cards?

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Rite Aid Corporation (RAD - Free Report) is slated to report third-quarter fiscal 2020 results on Dec 19. In the last reported quarter, the drug store retailer delivered a positive earnings surprise of 50%. 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 third quarter is pegged at 3 cents, suggesting a decline of 85% from the year-ago reported figure. Estimates have been unchanged over the past 30 days. The consensus estimate for third-quarter sales is pegged at $5,428 million, indicating a 0.4% decline from the prior-year quarter’s reported number.

Rite Aid Corporation Price and EPS Surprise

 

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 that includes EnvisionRxOptions PBM, enhancing front-end channels and transforming processes to deliver operational efficiency. Further, the company has been focusing on leveraging retail pharmacies as well as health and wellness offerings. Impressively, increased immunizations along with clinical pharmacy services and script growth strategies have been driving Rite Aid’s retail and pharmacy businesses.

In addition, the company has been leveraging its diverse brand offerings. Meanwhile, Rite Aid has been witnessing consistent Medicare Part D enrolment growth, which has been boosting Pharmacy Services’ revenues. Additionally, the company has been boosting customer experience, both online and in-store, as part of its efforts to boost market share.

However, it has been witnessing weakness in certain business areas, particularly the Retail Pharmacy business. Pharmacy sales for the past few quarters have been impacted by the inclusion of an adverse impact from the introduction of new generic drugs. Further, prescription reimbursement rates have been hurting the Retail Pharmacy segment. On the last earnings call, management had predicted that persistent decline in prescription reimbursement rates will hurt results throughout fiscal 2020.

Rite Aid has been witnessing weak front-end same-store sales for the past few quarters. Softness in tobacco sales, owing to regulation changes that restrict selling tobacco in some New York stores, along with weak over-the-counter cough-cold and flu product sales has been affecting front-end sales.

Zacks Model

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.

Although Rite Aid carries a Zacks Rank #3, 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:

CarMax, Inc (KMX - Free Report) presently has an Earnings ESP of +0.21% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carnival Corporation (CCL - Free Report) currently has an Earnings ESP of +5.30% and a Zacks Rank #3.

General Mills, Inc (GIS - Free Report) currently has an Earnings ESP of +1.58% and a Zacks Rank #3.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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