Rite Aid Jumps on Surprise Profit

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Rite Aid (NYSE: RAD  ) jumped as much as 20% today after the drugstore chain turned in its first full-year profit in six years.

So what: Higher margins from generic drugs, and an increased number of prescriptions, helped spur the turnaround. Despite a drop of same-store sales of 2%, the retail chain was still able to make a $0.13 per-share profit, thanks to an increase in gross margin from 24.9% to 31.7%. Analysts had expected a loss of $0.02 a share, and today's results were greatly improved from a year ago, when Rite Aid lost $0.18 per share. Sales were in line with estimates, dropping nearly 10%, as the company closed down stores over the last year.

Now what: Rite Aid is one of the cheaper stocks in the market based on price/sales ratio, so any step in the right direction is bound to send shares skyrocketing. Still, the retailer has a huge debt load on its hands, and declining same-store sales is always a concern, as well. The implementation of the Affordable Care Act could be a windfall for Rite Aid, however, as it's likely to add the number of prescriptions and drug sales nationwide, benefiting the country's No. 3 drugstore chain. Keep an eye on that issue moving forward.

Want more on Rite Aid? Add the company to your Watchlist by clicking here.


Read/Post Comments (0) | Recommend This Article (3)

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2359798, ~/Articles/ArticleHandler.aspx, 8/21/2014 11:59:52 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 hours ago Sponsored by:
DOW 17,039.49 60.36 0.36%
S&P 500 1,992.37 5.86 0.29%
NASD 4,532.10 5.62 0.12%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/21/2014 4:00 PM
RAD $6.40 Down -0.03 -0.47%
Rite Aid Corp CAPS Rating: **

Advertisement