Following the better-than-expected fourth-quarter fiscal 2013 results and an impressive fiscal 2014 outlook, shares of Rite Aid Corp. (RAD) attained a new 52-week high of $2.48 on Friday, Apr 19, before closing at $2.46. Moreover, this Zacks Rank #2 (Buy) drugstore chain operator beat its previous 52-week high of $2.33 and generated a year-to-date return of 75.7%.
Average volume of shares traded over the last 3 months came in at approximately 14,719K. Currently, the stock which has a market capitalization of $2.19 billion, trades at a forward P/E of 18.6x, significantly higher than the peer group average of 14.8x.
Driven by the introduction of high margin generic drugs and increased prescriptions at its pharmacy counters, Rite Aid posted a quarterly profit for the second consecutive quarter and a first-yearly profit since 2007.
Rite Aid’s fourth-quarter fiscal 2013 adjusted earnings of 21 cents per share fared better than both the year-ago quarter’s loss of 17 cents as well as the Zacks Consensus Estimate of break-even earnings. Moreover, after reporting losses for 6 consecutive fiscals, the company posted adjusted earnings of 24 cents per share in fiscal 2013, significantly surpassing the Zacks Consensus Estimate of a loss of 41 cents.
The positive earnings in the quarter and fiscal 2013 also benefited from the rise in adjusted EBITDA and lower LIFO charges. Rite Aid, which competes with China Nepstar Chain Drugstore Ltd. (NPD), continues to benefit from 9 straight quarters of improved adjusted EBITDA and same store prescription count.
Rite Aid reported adjusted EBITDA of $340.3 million, up 24.0% from $274.3 million in the prior-year quarter. As a percentage of sales, it improved 150 bps to 5.3%, gaining from higher pharmacy gross margin driven by new generic introductions and strong prescription count growth, partially offset by one lesser comparable week.
Further, Rite Aid, which trails only Walgreen Co. (WAG) and CVS Caremark Corp. (CVS) in size, anticipates its fiscal 2014 adjusted EBITDA to range from $1.075 to $1.175 billion. Moreover, net income is expected in the range of $45.0–$200.0 million or earnings per share of 4 cents to 20 cents.
Following this, the Zacks Consensus Estimate for fiscal 2014 jumped over fourfold to 13 cents per share from 3 cents, in the last 30 days. Moreover, during the same time frame, estimates for fiscal 2015 have surged 50.0% to 9 cents per share from 6 cents as forecasted earlier.
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