Following better-than-expected fourth-quarter fiscal 2013
results and an impressive fiscal 2014 outlook, shares of
Rite Aid Corp
) attained a new 52-week high of $2.33 on Friday, Apr 12, before
closing at $2.31. This Zacks Rank #2 (Buy) drugstore chain
operator had also beaten its previous 52-week high of $2.15 and
generated a year-to-date return of 65%.
Average volume of shares traded over the last 3 months came in
at approximately 12,156K. Currently, the stock, which has a
market capitalization of $2.06 billion, trades at a forward P/E
of 30.8x, significantly higher than the industry average of
Driven by the introduction of high margin generic drugs and
increased prescriptions at its pharmacy counters, Rite Aid posted
a quarterly profit for the second consecutive quarter and a
first-yearly profit since 2007.
Rite Aid's fourth-quarter fiscal 2013 adjusted earnings of 21
cents per share fared better than both the year-ago comparable
quarter's loss of 17 cents as well as the Zacks Consensus
Estimate of break-even earnings. Moreover, after reporting a loss
for 6 consecutive fiscals, the company posted adjusted earnings
of 24 cents per share in fiscal 2013, significantly surpassing
the Zacks Consensus Estimate of a loss of 41 cents.
The positive earnings in the quarter and fiscal 2013 also
benefited from the rise in adjusted EBITDA and lower LIFO
charges. Rite Aid, which competes with
China Nepstar Chain Drugstore Ltd
), continues to benefit from 9 straight quarters of improved
adjusted EBITDA and same store prescription count.
Rite Aid reported adjusted EBITDA of $340.3 million, up 24.0%
from $274.3 million in the prior-year quarter. As a percentage of
sales, it improved 150 bps to 5.3%, gaining from higher pharmacy
gross margin driven by new generic introductions and strong
prescription count growth, partially offset by one lesser
Further, Rite Aid, which trails only
CVS Caremark Corp.
) in size, anticipates its fiscal 2014 adjusted EBITDA to range
from $1.075 and $1.175 billion. Moreover, net income is expected
in the range of $45.0 to $200.0 million or earnings per share of
4 cents to 20 cents. Following this, the Zacks Consensus Estimate
for the fiscal jumped twofold to 6 cents per share in the last 7
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