Rite Aid (NYSE:RAD) kicked off 2014 on a positive note, as shares of the company resumed an upward trend. The company's lack of growth in revenue in the past quarter didn't seem to ward off investors for long. How has the company done in the past quarter compared to its leading competitors, Walgreen (NASDAQ:WBA) and CVS Caremark (NYSE:CVS)? Is Rite Aid the right bet to cash in on the Affordable Care Act, also known as Obamacare? Let's examine these issues. 

Revenue resumes its descent
Based on Rite Aid's fourth-quarter 2013 results, its retail sales declined by 1.5%. Moreover, Rite Aid closed 38 stores during the year. After controlling for fewer stores, the company's revenue per store still fell by 0.7%. The table below summarizes these findings.  

Source: Google Finance and Rite Aid's website.

Despite the lack of growth in sales, Rite Aid continues to improve its business operations not only by closing stores but also by remodeling and relocating stores. In the past quarter alone, Rite Aid closed nine stores, relocated four, and remodeled 95. These actions are likely to increase its sales and widen its profit margin down the line. Nonetheless, the company still expects low growth in sales for the year that will range between 0.3% and 0.8%. Has Rite Aid done any better than the market average or its leading competitors? Let's start with the health-stores market. 

According to the U.S Census Bureau (link opens PDF), during 2013, retail sales increased by 4.2%; health and personal-care store sales by 2.5%. Moreover, in the last two months of 2013, sales in health and personal-care stores rose by 5%. Therefore, Rite Aid has underperformed the health and personal-care market in terms of growth in sales even after accounting for the stores Rite Aid has closed.

Rite Aid's two leading competitors, Walgreen and CVS Caremark, have outperformed the company in terms of growth in sales and profitability. The table below shows the changes in Walgreen's revenue, profitability, and revenue per store during the past quarter. 

Source: Google Finance and Walgreen's website. 

In the fourth quarter, Walgreen's revenue increased by 5.9%. But after controlling for the 1.9% gain in new stores, the company's sales per store increased by 3.8%, which is close to the market average. 

CVS Caremark also did well in the third quarter: Revenue grew by 5.8%, and the company's average store's sales increased by 3.5% -- close to Walgreen's growth rate. Looking forward, CVS Caremark expects to increase its earning per share by 10% to 13% in 2014. Part of this rise is likely to come from the implementation of Obamacare. If the Affordable Care Act were to succeed, it could improve the sales of all three companies. 

Obamacare and health care stores
The slow start of Obamacare has also impeded the potential growth in sales of health stores. Nevertheless, this act is likely to augment prescription medication revenues for major health stores and drugstores. All three companies have been preparing for this act by setting up websites and having insurance agents in stores. Rite Aid is likely to cash in on the implementation of Obamacare. But the larger chains, CVS Caremark and Walgreen, which have more locations and a wider spread throughout the U.S, are likely to have a better chance of increasing their sales by a larger margin than Rite Aid has. 

The Foolish bottom line
Despite the recent drop in sales, Rite Aid continues to slowly improve its operations. The company's slow recovery is likely to reflect in higher sales and positive earnings in coming quarters. Moreover, the implementation of Obamacare is also likely to slightly augment its revenue. Nonetheless, Rite Aid's leading competitors are likely to augment their sales by a larger margin on account of their better spread and larger scale.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.