Declare the past, diagnose the present, foretell the future; practice these acts. As to diseases, make a habit of two things -- to help, or at least to do no harm.
These words almost sound like they were written to guide financial analysts (up until the bit about diseases, at least.) But they were actually written by Hippocrates in his Epidemics and aimed at physicians. Today, we'll do our own part to declare the past, and diagnose the present, plus update you on the thoughts of the analysts who foretell the future of pharmacy Rite Aid (NYSE:RAD). The company reports fiscal Q4 and full-year 2006 earnings results tomorrow.
What analysts say:
- Buy, sell, or waffle? Nine analysts follow Rite Aid. Of these, three rate the stock a buy, two a hold, and four a sell.
- Revenues. Analysts expect tomorrow's quarterly sales numbers to beat out last year's by 7%. The target is $4.65 billion.
- Earnings. Profits are due for a 67% fall, down to $0.02 a stub.
What management says:
Rite Aid CEO Mary Sammons made some interesting comments in the company's December earnings release. Sammons pronounced herself "pleased" with the quarter's results, which is fine as far as it goes. As you'll see in the chart below, although Rite Aid isn't setting the world on fire with its turnaround, its gross margins have inched up slightly over the last 18 months. The fact that this improvement didn't show up in operating and net results is partly owed to the firm's selling, general, and administrative costs rising faster than sales, and partly to a series of restructuring charges.
What management does:
|
Margins |
8/04 |
11/04 |
2/05 |
5/05 |
8/05 |
11/05 |
|---|---|---|---|---|---|---|
|
Gross |
24.7% |
24.8% |
25.1% |
25.3% |
25.2% |
25.2% |
|
Op. |
2.8% |
2.8% |
2.9% |
2.8% |
2.7% |
2.5% |
|
Net |
1.2% |
0.8% |
1.8% |
1.6% |
1.6% |
1.5% |
One Fool says:
What seems most odd, though, was Rite Aid's assertion that it would achieve strong results in Q4 in part because of "an extra week this fiscal year." This begs the question: "strong" relative to what? A quarter in which Rite-Aid had seven fewer days to rack up sales and earn profits? Even if that proves true tomorrow, I think that will be a bit of a hollow victory.
Competitors:
- Walgreen (NYSE:WAG)
- Wal-Mart (NYSE:WMT)
- CVS (NYSE:CVS)
Fool contributor Rich Smith does not own shares of any company named above.
