Based on the aggregated intelligence of 170,000-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||$943.66 million|
|Trailing-12-Month Revenue||$25.22 billion|
CEO John Standley
CFO Frank Vitrano
|Return on Capital (Average, Past 3 Years)||2.6%|
|Cash/Debt||$91.1 million / $6.2 billion|
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
Just last week, jmd747 listed several things working against Rite Aid:
CVS wellness plan better.
economy still soft...
only hope is a buyout when price gets lower.
In fact, Rite Aid's three-year average return on capital of 2.6% is substantially lower than that of rivals CVS (8.4%), Walgreen (13.9%), and Wal-Mart (13.3%).
CAPS member RallyCry expands on Rite Aid's particularly precarious financial position:
Rite Aid Corp is sporting a Long Term Debt to Cash ratio of 62 to 1 with negative earnings and cash flow for as far as the eye can see. How do they survive? Again 6.2 billion in long term debt versus 100 million in cash. Imagine the dilution that would need to take place at $1.11 per share to pay down the debt? With 887 million shares outstanding, reducing LTD through a new equity offering at market price would send the stock into the basement. Even if they double the share count, this would reduce long term debt by 984 million or only 16%.
What do you think about Rite Aid, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Wal-Mart is a choice of Motley Fool Inside Value, Global Gains, and Income Investor. Motley Fool Options has recommended a diagonal call position on Wal-Mart, and the Fool owns shares of it. Try any of our Foolish newsletter services free for 30 days.