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 (RAD 24.00%) has received a distressing two-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
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Headquarters (founded) |
Camp Hill, Pa. (1927) |
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Market Cap |
$2.3 billion |
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Industry |
Drug retail |
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Trailing-12-Month Revenue |
$25.4 billion |
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Management |
Chairman/CEO John Standley CFO Frank Vitrano |
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Return on Equity (average, past 3 years) |
6.6% |
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Cash/Debt |
$129.5 million/$6.1 billion |
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Competitors |
CVS Caremark Walgreen Wal-Mart Stores |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 16% of the 1,028 members who have rated Rite Aid believe the stock will underperform the S&P 500 going forward.
Just last week, one of those Fools, TMFGemHunter, touched on the stock's seemingly unsustainable price run:
Rite Aid has rallied this year after it surprised investors and analysts with its first profit in several years. However, the company's outperformance was probably a fluke, driven by the Walgreens-Express Scripts (NASDAQ: ESRX) dispute. With those two companies having resolved their differences, Rite Aid sales growth has stalled out. The steady growth and superior scale of [CVS Caremark] and Walgreens will continue to squeeze Rite Aid over the next few years, outweighing any benefit from the aging of the U.S. population.
If industry conditions improve dramatically, Rite Aid could spike because it has a such a low market cap (and is highly leveraged). On the other hand, a downturn could send the company into bankruptcy. This "turnaround story" doesn't seem to be worth the risk.
