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Rite Aid Corporation Message Board

  • investora2z investora2z Apr 5, 2013 4:12 AM Flag

    Next few quarters will be crucial

    The chart for past few years indicates that the stock has repeatedly touched $2 levels. It did so in September 2009, March 2012 and it nearly did so recently. The current market capitalization is around $1.55 billion, and the sales has remained nearly static between $25 to $26 billion. It has been making losses over many years, and that is the main reason for this extremely skewed market cap to sales ratio. The debt on books has been high at around $6 billion. The recent quarter, however, has shown a profit after a very long time (even if it is a small $61.87 million on a sales of $6.237 billion). The debt has come down slightly but still remains high for this level of sales. The improved performance has helped the stock rise from its 52 week low in December 2012 ($0.95) to the current levels of around $1.75 (80% rise in 4 months). Now it is trading well above the 200 DMA of $1.38 and is touching $1.75 which is the 50 DMA. All said and done, the probability of sustenance of the uptrend depends on the performance over the next few quarters. If the company remains profitable, even if the sales are lower, it would indicate that the cost efficiencies are improving. RAD can diversify into other product segments by identifying faster growing and more profitable products. Companies like ChromaDex (CDXC) have recently launched products like BluScience which were very successful. CDXC sold BluScience in a very good deal to NutriSci to leverage the power of its retail chain penetration in various markets. RAD can easily use its 4500 plus store network to attract products which could boost sales. Pharma drug sales, which is the main component of RAD sales, are often susceptible to sudden declines due to patent expirations and consequent influx of lower cost generic products.

 
RAD
7.29+0.01(+0.14%)Jul 23 4:01 PMEDT

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