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Factors Likely to Decide Rite Aid's (RAD) Fate in Q2 Earnings

Rite Aid Corporation RAD is scheduled to report second-quarter fiscal 2023 results on Sep 29, before the opening bell. The drugstore retailer is likely to have witnessed top and bottom-line declines in the to-be-reported quarter.

The Zacks Consensus Estimate for the fiscal second-quarter bottom line is pegged at a loss of 56 cents, suggesting a decline of 36.6% from a loss of 41 cents reported in the year-ago quarter. The consensus mark has been unchanged in the past 30 days. The Zacks Consensus Estimate for its fiscal second-quarter revenues is pegged at $5.8 billion, suggesting a 5.6% decline from the prior-year quarter’s reported figure of $6.1 billion.

In the last reported quarter, RAD witnessed an earnings surprise of 14.3%. The company has a trailing four-quarter earnings surprise of 3.5%, on average.

Key Factors to Note

Rite Aid has been reeling under sluggishness in the Retail Pharmacy and Pharmacy Services segments. The company has been witnessing declining demand for COVID-19 vaccines and testing.

Lesser clients in the Pharmacy Services segment and reduced Elixir insurance memberships have been concerning. Such factors are likely to have dented the company’s top-line performance in the fiscal second quarter.

However, higher non-COVID prescriptions, strength in PBM and the continued expansion of delivery services act as major growth drivers. Increased use of high-cost drugs at Elixir bodes well.

The company has been offering home delivery service to customers with an eligible prescription, with the benefit of zero delivery fee. It has also been providing pickup and drive-through services for prescriptions and over-the-counter products at its stores. RAD launched the Buy Online Pickup In Store initiative to offer better drive-through and curbside pickup options.

The company also expanded the Instacart delivery service. It also made strategic partnerships with Amazon and Instacart for home delivery. It partnered with DoorDash to offer same-day delivery of non-prescription health, convenience and wellness essentials, along with ScriptDrop to expedite the prescription delivery process.

Shipt and Rite Aid also teamed up to provide the same-day delivery of health and wellness products to Rite Aid’s retail footprint across 17 states. Rite Aid collaborated with Afterpay to offer the service of shop online and pay later.

The company launched its loyalty program, Rite Aid Rewards, to expand its customer base to improve customer engagement in pharmacy and front-end sales. Gains from such endeavors are likely to get reflected in the fiscal second-quarter results.

Rite Aid has been focusing on strengthening its foothold in mid-market PBM, innovating across its retail and mail-order pharmacy channels, enhancing the in-store experience by curated digital offerings, improving merchandise, and rebranding its image with a new logo.

Rite Aid’s Stores of the Future and the acquisition of Bartell are anticipated to have helped expand the customer base. Alongside this, it launched a loyalty program to improve front-end margins, expanded its brands and enhanced PBM margins via its new rebate aggregation agreement. The company has been making efforts to grow the Elixir membership and reposition its approach to the Elixir Insurance Part D business.

Rite Aid Corporation Price and EPS Surprise

 

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

Kroger KR has an Earnings ESP of +0.21% and a Zacks Rank of #2. The company is expected to register top and bottom-line growth when it reports second-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for KR's quarterly revenues is pegged at $33.9 billion, which suggests growth of 6.5% from the prior-year quarter's reported figure.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Kroger’s quarterly earnings has moved up 2.6% in the past 30 days to 80 cents per share. It also suggests 2.6% growth from the year-ago reported number. KR has a trailing four-quarter earnings surprise of 15.7%, on average.

Hibbett HIBB currently has an Earnings ESP of +5.85% and a Zacks Rank #2. HIBB is likely to register top and bottom-line growth when it reports third-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $427.3 million, which suggests growth of 12% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Hibbett’s quarterly earnings has moved up 13.9% in the past 30 days to $2.54 per share, suggesting growth of 51.2% from the year-ago quarter's reported number. HIBB has a trailing four-quarter negative earnings surprise of 5.5%, on average.

Tractor Supply Co. TSCO currently has an Earnings ESP of +0.68% and a Zacks Rank #3. TSCO is anticipated to register top and bottom-line growth when it reports third-quarter 2022 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.3 billion, indicating an improvement of 8.8% from the prior-year quarter.

The Zacks Consensus Estimate for Tractor Supply’s bottom line has moved up by a penny in the past seven days to $2.09 per share. The consensus estimate suggests growth of 7.2% from the year-ago quarter's reported figure. TSCO has a trailing four-quarter earnings surprise of 10.2%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Rite Aid Corporation (RAD) : Free Stock Analysis Report
 
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