Based on the aggregated intelligence of 145,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, retail drugstore operator Rite Aid (NYSE: RAD ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Rite Aid's business and see what CAPS investors are saying about the stock right now.
Rite Aid facts
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Headquarters (Founded)
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Camp Hill, Pa. (1927)
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Market Cap
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$1.36 billion
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Industry
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Food and staples retailing
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Trailing-12-Month Revenue
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$25.91 billion
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Management
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CEO Mary Sammons (since 2003)
COO John Standley (since 2008)
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Return on Capital (Average, Past 3 Years)
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1.8%
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Cash/Debt
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$156.6 million / $6.4 billion
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1-Year Return
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313%
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Competitors
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CVS Caremark (NYSE: CVS )
Walgreen (NYSE: WAG )
Wal-Mart Stores (NYSE: WMT )
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CAPS Members Bearish on RAD Also Bearish on
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Ford Motor (NYSE: F )
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CAPS Members Bullish on RAD Also Bullish on
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Altria (NYSE: MO )
General Electric (NYSE: GE )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 13% of the 897 members who have rated Rite Aid believe the stock will underperform the S&P 500 going forward. These bears include herbs814 and TSIF, who is ranked in the top 1% of our community.
Last year, herbs814 touched on the stock's rather sickly fundamentals:
revenues and earnings in decline. high debt, negative ROE. majority of enterprise value is debt, not equity value.
In a pitch from late last month, TSIF also prescribed a swift sale of the stock:
Rite Aid Corp is a victim of the current health care market. ... CVS also recently took a similar hit. Add in competition from [Wal-Mart] and we move up the chain. First it was the local pharmacies getting squeezed out and now the larger chains. Rite Aid has never been an outperformer in the markets. Now, however, even a tourniquet will not help the flow of bleeding. ... NET NEGATIVE Tangible assets of $2.3 Billion and still falling. Negative income, negative cash flow. This 1927, [withstood] the depression, retail chain is on life support.
What do you think about Rite Aid, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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