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Rite Aid (RAD) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Rite Aid (RAD) closed at $5.39 in the latest trading session, marking a +1.51% move from the prior day. This move outpaced the S&P 500's daily gain of 1.1%. Elsewhere, the Dow gained 1.05%, while the tech-heavy Nasdaq added 1.32%.

Prior to today's trading, shares of the drugstore chain had lost 19.05% over the past month. This has lagged the Retail-Wholesale sector's loss of 5.1% and the S&P 500's loss of 5.05% in that time.

Investors will be hoping for strength from RAD as it approaches its next earnings release. The company is expected to report EPS of $0.07, up 135% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.41 billion, down 0.2% from the year-ago period.

Investors should also note any recent changes to analyst estimates for RAD. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. RAD is currently a Zacks Rank #5 (Strong Sell).

Digging into valuation, RAD currently has a Forward P/E ratio of 33.19. For comparison, its industry has an average Forward P/E of 8.72, which means RAD is trading at a premium to the group.

The Retail - Pharmacies and Drug Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 236, putting it in the bottom 8% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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