U.S. Markets closed

What is Likely to Drive Rite Aid's (RAD) Earnings in Q1?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·5 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Rite Aid Corporation RAD is scheduled to report first-quarter fiscal 2023 results on Jun 23, before the opening bell. The Zacks Consensus Estimate for its fiscal first-quarter revenues is pegged at $5.8 billion, suggesting a 6.7% decline from the prior-year quarter’s reported figure of $6.2 billion.

The Zacks Consensus Estimate for the fiscal first-quarter bottom line is pegged at a loss of 70 cents, suggesting a significant decline from earnings of 38 cents reported in the year-ago quarter. The consensus mark has been unchanged in the past 30 days.

In the last reported quarter, the drugstore retailer reported a negative earnings surprise of 186%. The company has a trailing four-quarter earnings surprise of 18.1%, on average.

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

Key Factors to Note

Rite Aid has been gaining from continued strength in its underlying business, and enhanced retail and digital experiences. The company remains committed to providing lower healthcare costs, better customer engagement and personalized services. Its Retail Pharmacy segment is expected to have contributed to revenue growth in the fiscal first quarter, driven by COVID-19 vaccinations, as well as increased acute prescriptions and maintenance prescriptions.

Improved demand for ancillary vaccines is also likely to have aided the top line. Gains from the Bartell buyout and a solid online show on the back of expanded delivery facilities have also been tailwinds.

Rite Aid has been expanding delivery services to its customers, including home delivery service to customers with an eligible prescription, with the benefit of zero delivery fees. It has also been providing pick-up and drive-through services for prescriptions and over-the-counter products at its stores.

The above-mentioned services are likely to have contributed to increased sales in the fiscal first quarter. Continued strength in on-demand delivery, third-party marketplaces, and buy online, pick up at store options also remain upsides.

Additionally, RAD has made partnerships with Amazon and Instacart for home delivery; DoorDash to offer same-day delivery of non-prescription health, convenience and wellness essentials ScriptDrop to expedite the prescription delivery process; and Shipt to provide same-day delivery of health and wellness products. Gains from such endeavors are likely to get reflected in the fiscal first-quarter results.

Rite Aid has been focused 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 newly launched Stores of the Future and the acquisition of Bartell are anticipated to have helped expand the customer base. Its RxEvolution strategy bodes well. These are likely to have contributed to sales growth in the to-be-reported quarter.

However, the company has been witnessing supply-chain pressures and drab store traffic, which have been affecting inventory and sales. For the fiscal first quarter, management expects reduced COVID-19 vaccinations and a decline in Elixir revenues to hurt the bottom line.

The company has been witnessing higher SG&A expenses for the past few quarters on higher payroll costs, a rise in compensation and the inclusion of the Bartell-related expenses. The persistence of these costs is likely to have dented the company’s profitability in the fiscal first quarter.

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:

Auto Nation AN has an Earnings ESP of +9.38% and a Zacks Rank of 2. The company is expected to register bottom-line growth when it reports second-quarter 2022 numbers. The Zacks Consensus Estimate for AN’s quarterly earnings has moved up 4.9% in the past 30 days to $5.95 per share, suggesting 23.2% growth from the year-ago reported number.

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

The Zacks Consensus Estimate for Auto Nation’s quarterly revenues is pegged at $6.9 billion, which suggests a decline of 1.6% from the prior-year reported figure. AN has a trailing four-quarter earnings surprise of 27.4%, on average.

Lithia Motors LAD currently has an Earnings ESP of +2.38% and a Zacks Rank #3. LAD is likely to register top and bottom-line growth when it reports second-quarter 2022 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $7.5 billion, which suggests growth of 24.7% from the prior-year quarter.

The Zacks Consensus Estimate for Lithia Motors’ quarterly earnings has moved up 7.9% in the past 30 days to $11.85 per share, suggesting growth of 6.6% from the year-ago quarter’s reported number. LAD has a trailing four-quarter earnings surprise of 30.5%, on average.

McDonald's MCD currently has an Earnings ESP of +1.84% and a Zacks Rank #3. MCD is anticipated to register bottom-line growth when it reports second-quarter 2022 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $5.85 billion, indicating a decline of 0.6% from the prior-year quarter.

The Zacks Consensus Estimate for McDonald's bottom line has been unchanged in the past 30 days at $2.46 per share. The consensus estimate suggests growth of 3.8% from the year-ago quarter’s reported figure. MCD has a trailing four-quarter earnings surprise of 6.3%, on average.

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


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research