Infographic: Where Does This Drugstore Giant Make Money?

Legendary fund manager Peter Lynch once said that you shouldn't invest in any idea you couldn't illustrate with a crayon.

Though I'm not much for crayons, I do love the pithiness of that line. We regularly preach the same idea at the Fool: Don't buy what you don't understand. And if you can't simply sketch out a company's business model -- how it actually makes money -- then maybe you shouldn't be investing in it.

If you live in an urban area and you need a prescription filled, chances are you have a few options to choose from. I'm a Rite Aid (NYSE: RAD  ) kinda guy myself. I was recently out of town and looking for somewhere to get some toiletries -- and a quick search on my smartphone revealed that there were no Rite Aid locations nearby. That got me wondering whether the chain is as widespread as I'd thought, as well as how it makes money. Let's take a look. (Note: I'm focusing on revenues here, not earnings.)

Source: Rite Aid 2011 10-K.

Think I missed something in this illustration? General thoughts on this exercise? Let me know in the comments section below. And if you haven't already, be sure to follow our Rite Aid news and commentary using the Fool's free new My Watchlist tool.

Fool.com graphics/photo/art editor Dari FitzGerald doesn't own shares of Rite Aid. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (4)

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  • Report this Comment On June 14, 2012, at 10:14 PM, ouchtouch wrote:

    Revenues are not earnings. Totally useless bit of drivel.

  • Report this Comment On June 15, 2012, at 1:06 PM, Mil2025 wrote:

    That's a GREAT Graphic!!!

    Too many financial sites are getting bogged down with 1993 excel charts - This is indeed a welcome addition!!

    Have a great day!!

  • Report this Comment On June 16, 2012, at 10:56 PM, FreakyFrank wrote:

    Good article - good company!

    While one can't argue that RAD's debt is a BIG problem, I think the low operating margin is the best way to steal customers from Walgreen & CVS - don't you??? Then, after they have doubled their customer base, they can raise prices and be much more profitable, imho.

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