Rite Aid Corporation
) have been gaining momentum since the company released its
comparable store sales (comps) results on Mar 6, 2014. Shares
have climbed 2% since the comps release, apart from having
touched a 52-week high of $7.05 yesterday. However, the company
eventually closed at $6.77, amassing a significant year-to-date
return of 34.3%.
CVS CAREMARK CP (CVS): Free Stock Analysis
MCKESSON CORP (MCK): Free Stock Analysis
RITE AID CORP (RAD): Free Stock Analysis
WALGREEN CO (WAG): Free Stock Analysis Report
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Rite Aid's comps for the five weeks ended Mar 1, 2014 increased
1.5%. The growth was attributable to a rise in pharmacy comps,
partly offset by a decline in front-end comps. Moreover, total
drugstore sales for the period was $2.515 billion, up 2.4% from
the year-ago figure of $2.457 billion. Prescription sales
constituted 69.1% of total drugstore sales. Third-party
prescription sales accounted for 97.3% of pharmacy sales.
Rite Aid is the third largest drugstore retailer in terms of
number of stores after
CVS Caremark Corp.
). Positive comps came as a relief for investors following the
disappointing third-quarter fiscal 2014 results and an
unfavorable outlook that released in Dec 2013.
Apart from positive comps, Rite Aid's shares have gained on the
recent news of an expansion of its distribution agreement with
) for both brand and generic pharmaceuticals, which will allow
both the companies to mutually benefit from each other's
As per the terms of the expanded agreement, McKesson will be
responsible for sourcing and distribution of generic
pharmaceuticals for Rite Aid as a part of its proprietary One
Stop Generics program. On the other hand, Rite Aid stores will
benefit from McKesson's daily direct-to-store delivery service
model for brand and generic pharmaceutical products.
Currently, Rite Aid trades at a forward P/E of 21.0x, a 9.1%
premium to the peer group average of 19.24x. The last traded
price is 5.6% above the Zacks Consensus average analyst price
target of $6.41. Average volume of shares traded over the last 3
months stands at approximately 24,528.1K. Moreover, the company's
long-term EPS growth rate is 17.5%, ahead of the peer group
average of 16.8%.
Looking ahead, this Zank Rank #2 (Buy) company's sustained focus
on expanding pharmacy and clinical services through its
Wellness+customer loyalty program and remodeling of wellness
stores raise our hopes. We believe that such measures will enable
the company to broaden its customer base and boost top and