The staggering rise in shares of Rite Aid (NYSE:RAD) during the year has partly been attributed to the company's improved operational and financial situation. These improvements led the company to reach four consecutive profitable quarters, stable sales, and a slow decline in debt.

In the upcoming earnings report for the third quarter of fiscal-year 2014, will Rite Aid continue to impress its investors? How has the company performed with respect to its competitors such as Walgreen (NASDAQ:WBA) and CVS Caremark (NYSE:CVS) in the past quarter? How will Rite Aid perform in the upcoming quarter? Let's tackle these issues. 

Revenue picking up slowly 
According to Rite Aid's last couple of monthly sales reports (for September  and October), the company's retail sales grew by 2.1% during those two months. Conversely, Rite Aid closed 38 stores during those months. After controlling for the drop in number of stores, the growth in revenue per store reached 2.9%. The table below summarizes these findings. 

Unless the company's November sales fall, Rite Aid is likely to augment its revenue by roughly 2% in the third quarter of fiscal year 2014. Nonetheless, during the first 10 months of 2013, the company's revenue slipped by 0.3%.

How do these numbers compare to the market average and Rite Aid's competitors?

The recent U.S retail sales report, which covers the changes in the retail market as of October, presented a 2% gain in the first 10 months of 2013 (year-over-year) in sales of health and personal-care stores; sales grew by 6.5% and 5.9% during September and October, respectively. These numbers are much higher than Rite Aid's growth in sales. Even after controlling for the decline in number of stores, the company's revenue grew by roughly half the pace of the sector's average.

Rite Aid's competitors have outperformed the company in the past several months in terms of growth and profit margins. The chart below shows Rite Aid's lower profit margin compared to that of Walgreen and CVS Caremark. Rite Aid is likely to maintain much lower profitability compared to its peers in the coming quarter.

Source: Google Finance.

Despite these figures, Rite Aid is doing well in improving its sales. The table below breaks down the company's revenue and earnings before interest and taxes to the average store.

Sources: Google Finance and company website.

Rite Aid's revenue only inched up by 0.6% during the quarter, but after controlling for the decline in number of stores, the company's growth in sales per store reached 1.7%.

Sources: Google Finance and company website.

In the recent quarter, Walgreen's revenue grew by 5.1%. Nearly half of this growth was due to the opening of new locations. This puts Rite Aid's growth in sales per store very close to Walgreen's. Nonetheless, CVS Caremark hasdone better than Rite Aid and Walgreen as indicated in the table below.

Source: Google Finance and company website.

As you can see above, CVS Caremark's sales per store rose by 3.5% in the past quarter -- more than double Rite Aid's. Therefore, even though Rite Aid has improved its business, other companies such as CVS Caremark continue to outperform Rite Aid in terms of growth and profit margins. Many investors still anticipate Rite Aid and other drug-store chains will benefit from Obamacare in the coming years. Let's examine the latest on this topic and how it could augment these companies' revenues.

Cashing in on Obamacare
One of the reasons investors have an interest in health care stores is the potential rise in demand for health care treatment due to the implementation of the Affordable Care Act, also known as Obamacare. Leading drug retailers including Walgreen, CVS Caremark, and Rite Aid are preparing for the rise in demand in prescription medication by setting up websites to explain the legislation to potential new customers, holding events with insurance experts, and havinginsurance agents in stores.

These factors are likely to eventually result in higher sales for these companies in 2014. For all three companies, prescription sales account for roughly two-thirds of their total revenues. So for every one percentage point rise in prescription sales, their total revenues will rise by roughly 0.7 percentage points.

Specifically, some analysts estimate the implementation of Obamacare will add 1%-2% to pharmacy sales. Considering the slow enrollment for the Affordable Care Act, these early estimates could be lower. So for the next couple of quarters, Rite Aid may see a very small increase in sales due to Obamacare.

In terms of market share of prescription sales, CVS Caremark is leading the way with nearly 23% of the market share, partly due the fallout in 2012 between Walgreen and Express Scripts over payment terms. This resulted in clients turning from Walgreen to CVS Caremark.

Walgreen's market share is currently 19%. Rite Aid's market share is only 6.4%. This means, in terms of market share, assuming all things equal, the main beneficiary from the rise in demand in prescription medicine due to Obamacare is likely to firstly be CVS Caremark. This is another way to see that CVS Caremark is most likely to be the main beneficiary from Obamacare and Rite Aid is the least of the three companies.

Final note
Rite Aid is making great strides in emerging from its slowdown and is likely to show a 2% gain in revenue in the upcoming earnings report. This growth rate, however, is likely to be lower than the market average and lower than its leading competitors.

Finally, Rite Aid's staggering rise might eventually reach a halt, considering its competitors CVS Caremark and Walgreen offer dividend payments, are likely to benefit more from Obamacare, and have a better financial situation, higher growth in sales and wider profit margins.