Why Rite Aid Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, retail drugstore operator Rite Aid (NYSE: RAD  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Rite Aid, and see what CAPS investors are saying about the stock right now.

Rite Aid facts

   

Headquarters (founded)

Camp Hill, Pa. (1927)

Market Cap

$1.5 billion

Industry

Drug retail

Trailing-12-Month Revenue

$26.1 billion

Management

Chairman/CEO John Standley

CFO Frank Vitrano

Return on Equity (average, past 3 years)

4.6%

Cash/Debt

$263.6 million / $6.2 billion

Competitors

CVS Caremark (NYSE: CVS  )

Walgreen (NYSE: WAG  )

Wal-Mart (NYSE: WMT  )

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 17% of the 1,007 members who have rated Rite Aid believe the stock will underperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star spiritof78, succinctly summed up the Rite Aid bear case for our community:

Nice market position but improperly executed. ... The stores should be more locally centric (but with national buying power) to provide small dollar high volume sales to consumers. Their debt to capital ratio is just unsustainable even with an improving economy.

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Read/Post Comments (5) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 14, 2013, at 10:39 PM, bestwaytoriches wrote:

    Between the both of you get a broker or short RAD.

    Most professional brokers believe RAD will triple in 2013. Rad has recently raised guidance and will continue this as they refinance debt. RAD move to the new price target $3.20 is based on what is happening not the past. RAD current price and debt still make it a very attractive Buy out.

  • Report this Comment On February 15, 2013, at 10:44 AM, dictionshunary wrote:

    I agree with the upside comment; too many folks knowledgable in fact-based research are buying and buying and buying.

  • Report this Comment On February 15, 2013, at 8:24 PM, CTadvocate wrote:

    REALLY? RAD is a a sad case of Pump and Dump..... Folks pump it up and then SELL. Frankly the company is an embarrassment to itself and the other Rx retail stores. Rite Aid is laughable at best and will, at some point, FAIL.....

  • Report this Comment On February 15, 2013, at 10:18 PM, masterwallstreet wrote:

    I know they call this motley fool but you should change it to the fool. Who are you trying to fool? Let us compare notes. You have eight improved quarters that beat the estimates. Last quarter they made a profit. It was a record high flu season. This is still fLu season. You have analysts upgrade it fom outperform to a buy to a strong buy. Last month it increased sales by close to five percent. This month continued flu shots, refinanced debt, Valentine's day and the blizzard will increase sales this month. This month is not even over yet.They will have a record profit this quarter in my opinion only.

  • Report this Comment On February 19, 2013, at 2:18 PM, jackm12 wrote:

    As always I have missed on a great trade. Thanks to Mottley fools analyst.

    These guys are true fools.

    The stock is up 5% today and I could have bought it last week.

    I did not buy because I read this MF analyst.

    Thank you for helping us miss a good trade.

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