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Rite Aid Reports in-Line EPS in the Second Quarter

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Sep. 28 2018, Updated 8:57 a.m. ET

Rite Aid’s second-quarter earnings

Rite Aid (RAD) reported a second-quarter adjusted net loss from continuing operations of $7.9 million or $0.01 loss per share. This loss compares to an adjusted net loss of $17.4 million or $0.02 per share in the corresponding quarter last year. The company delivered in line with Wall Street’s expectations for the quarter.

Competitor CVS Health (CVS), which reported quarterly results in early August, delivered its tenth consecutive earnings beat. Its adjusted diluted earnings per share increased 27% YoY (year-over-year) to $1.69, beating Wall Street by 8 cents.

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Second-quarter margins

Rite AId’s adjusted EBITDA from continuing operations grew 8.5% YoY to $148.6 million while the adjusted EBITDA margin improved by ten basis points to 2.7% of sales. This improvement reflects the inclusion of $24 million in fees relating to a transition services agreement with WBA during the quarter.

Wall Street’s reaction to the second-quarter results

There were no recommendation changes for Rite Aid after its second-quarter results. The company, which is covered by nine analysts, maintains its 3.2 rating on a scale of 1 (“strong buy”) to 5 (“sell”). In comparison, Walgreens and CVS are ranked a 2.7 and 1.9, respectively.

Seven analysts (78%) have a “hold” recommendation on Rite Aid while two analysts suggest selling the stock. There are no “buy” recommendations on the company. In comparison, 30% of analysts suggest buying Walgreens while 74% say to buy CVS.

Rite Aid’s target price also remains unchanged after its second-quarter results. Analysts, on average, have set a price target of $1.37 for the company, which reflects an upside of around 10%.

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