Trading momentum isn't being kind to Rite Aid (NYSE:RAD) as it heads into a critical financial report later this week. Shares of the out-of-favor drugstore operator kicked off the new trading week by hitting a fresh five-year low on Monday. The stock has already shed more than a third of its value in 2018, and the stock has plummeted 87% since peaking three summers ago.

Life has been hard for Rite Aid since it has had two buyouts come undone in recent months, and investors will probably have more questions than the chain has answers for when it steps up with its fiscal second-quarter results on Thursday morning. It will host its quarterly earnings call an hour before the market opens. 

A Winter is here spot for Rite Aid that rings true in more ways than one.

Image source: Rite Aid.

Finding the right prescription

Wall Street isn't holding out for much. Analysts see revenue plummeting 30% to $5.36 billion, but that's not a fair year-over-year comparison. It has sold 1,932 of its stores in a $4.375 billion asset sale since the end of last year's fiscal second quarter. Investors will want to seize on comps and organic top-line growth to get a better snapshot of how Rite Aid is faring these days. 

Analysts are holding out for a small loss of $0.01 a share for the period, but that also isn't a deal breaker. It's the same adjusted deficit-per-share that Rite Aid has delivered in three of the past four quarters. 

The stock's direction on Thursday will ultimately be dictated by how well Rite Aid can sell investors on its prospects as a stand-alone entity. It has spent the past three years -- 35 months, to be exact -- in limbo. Regulators eventually shut down its first buyout proposal, and angry investors spurred Rite Aid into calling off its corporate combination with supermarket giant Albertsons this summer.

The market has every right to be concerned about Rite Aid as a swinging single in this challenging climate. Slowing volume and crummy reimbursement rates have smacked the industry's smaller players, and this is before we size up the inevitable threat of the country's leading online retailer making a play to deliver prescriptions

The silver lining for those still long Rite Aid is that the partial asset sale has allowed it to improve its balance sheet. One can also argue that Rite Aid remains a viable buyout candidate even after the last two deals crashed and burned.  

Rite Aid will have to address the laundry list of concerns about the company as an ongoing business. It will have to change. The market expects a transformation, and with the stock hitting fresh five-year lows on Monday, even the slightest hint of stability will be welcome by battered shareholders.