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Things You Must Know Ahead of Rite Aid's (RAD) Q3 Earnings

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Rite Aid Corporation RAD is scheduled to report third-quarter fiscal 2021 results on Dec 17, before the opening bell. The drugstore retailer is likely to have witnessed sales growth in the quarter under review.  The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $5.85 billion, suggesting a 7% increase from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for the company’s fiscal third-quarter bottom line is pegged at a loss of 1 cent, whereas it reported earnings of 54 cents in the year-ago quarter. Notably, the consensus mark has been stable in the past 30 days.

In the last reported quarter, the drugstore retailer delivered an earnings beat of 127.3%. Notably, the company has an earnings surprise of 433.8%, on average, for the trailing four quarters.

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

Factors to Note

Rite Aid’s top line has been benefiting from a rise in same-store prescription count and higher front-end sales. Notably, solid performance in the retail pharmacy and pharmacy services segments has been aiding the company’s sales in the past few quarters. Rise in Medicare Part D membership is likely to have continued to contribute to growth of the pharmacy services segment revenues. Moreover, retail pharmacy same-store sales are aided by an increase in front-end and pharmacy sales.

Solid growth in prescription deliveries, driven by free home-delivery services as well as a sturdy performance at Elixir, has also been contributing to growth. It has been providing home-delivery service to customers with an eligible prescription, with the benefit of zero delivery fees. Moreover, it has launched Buy Online Pickup In Store initiative, curbside pickup options and expanded the Instacart delivery facility to more than 2,400 locations to better serve customers. These initiatives are likely to have contributed to top-line gains in the fiscal third quarter. Additionally, cost-cutting actions have been contributing to quarterly growth.

Despite COVID-related woes, the company has been witnessing strong demand for cleaning supplies, paper products, OTC items and liquor as more consumers are taking to the stay-at-home trend. Also, the demand for seasonal products along with essentials like hair-care, nail and baby-care has been positive. These are likely to have aided revenues in the fiscal third quarter.

However, Rite Aid has been witnessing dismal margins for the past few quarters. The company’s gross margin has been affected by headwinds related to the pharmacy reimbursement rate. The persistence of this trend is expected to have weighed on the company’s margins and bottom line in the to-be-reported 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 but an Earnings ESP of 0.00% makes surprise prediction difficult.

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:

Beacon Roofing Supply, Inc. BECN has an Earnings ESP of +1.20%. It sports a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fastenal Company FAST has an Earnings ESP of +1.36%. It currently carries a Zacks Rank #3.

Constellation Brands Inc. STZ currently has an Earnings ESP of +2.64% and a Zacks Rank #3.

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Rite Aid Corporation (RAD) : Free Stock Analysis Report
 
Fastenal Company (FAST) : Free Stock Analysis Report
 
Beacon Roofing Supply, Inc. (BECN) : Free Stock Analysis Report
 
Constellation Brands Inc (STZ) : Free Stock Analysis Report
 
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