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
With that in mind, let's take a closer look at Rite Aid's business and see what CAPS investors are saying about the stock right now.
Rite Aid facts
| Headquarters (Founded) | Camp Hill, Pa. (1927) |
| Market Cap | $1.4 billion |
| Industry | Drug retail |
| Trailing-12-Month Revenue | $25.4 billion |
| Management | CEO John Standley CFO Frank Vitrano |
| Return on Capital (Average, Past 3 Years) | 3.2% |
| Cash/Debt | $148.5 million / $6.3 billion |
| Competitors |
CVS Caremark Walgreen Wal-Mart Stores |
Sources: S&P Capital IQ and Motley Fool CAPS.
On CAPS, 48% of the 282 members who have rated Rite Aid believe the stock will underperform the S&P 500 going forward.
Just last month, one of those bears, njf735, quoted Rite Aid's own annual report as a clear sign of how dangerous its debt load is:
"Among other things, our indebtedness will:
• limit our flexibility in planning for, or reacting to, changes in the markets in which we compete;
• place us at a competitive disadvantage relative to our competitors with less indebtedness;
• render us more vulnerable to general adverse economic, regulatory and industry conditions; and
• require us to dedicate a substantial portion of our cash flow to service our debt."Interest coverage = 0.2x
Quick ratio = 0.4x
Operating income hardly exceeds interest payments. How do you compete against [Walgreen] and CVS when you are barely scraping by after servicing debt?
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