Rite Aid Corp.
) achieved a new 52-week high of $5.33 on Oct 7, 2013, beating
its previous high of $5.30 on Oct 3, and eventually closed trade
at $5.20. The average volume of shares traded over the last 3
months was approximately 25,013K. Moreover, the company currently
trades at a forward P/E of 23.4x, a 52.7% premium to the peer
group average of 15.32x.
We believe that the strong price appreciation is primarily
attributable to the company's comparable-store sales (comps)
growth for September. This was the fourth consecutive month when
Rite Aid posted positive comps results.
Apart from this, consistent positive earnings in the past four
quarters were a tailwind. Rite Aid, which witnessed declining
sales and weak bottom-line results in the recent past, is now
showing signs of improvement, thanks to the company's cost
reduction initiatives and improvement in store-level
This Zacks Rank #1 (Strong Buy) stock has outperformed the
Zacks Consensus Estimate five times in the trailing six quarters.
In the recently concluded quarter, Rite Aid posted adjusted
earnings of 8 cents per share, which fared better than the Zacks
Consensus Estimate of a loss of 4 cents and the year-ago
comparable quarter's loss of 5 cents.
Furthermore, on the back of better-than-expected first-half
financial results and the anticipation of a stronger second-half
performance than what was projected earlier, management raised
its fiscal 2014 guidance. Rite Aid now expects earnings in the
range of 18-27 cents per share for the fiscal, up from the
previous guidance range of 1-16 cents. Currently, the Zacks
Consensus Estimate stands at 22 cents per share.
Rite Aid utilized additional resources such as the Wellness+
customer loyalty program and the Flu Immunization program to
boost customers' demand amid the challenging macroeconomic
environment. The company's Wellness+ customer loyalty program has
been successful in attracting customers. This is evident from the
fact that Wellness+ members in fiscal 2013 contributed 79% of
front-end sales, compared with 68% in fiscal 2012.
On the cost front, the company is focusing on generating cost
savings through centralized indirect procurement of drugs and
reduction in supply chain costs. We believe that these programs
and initiatives will facilitate the company to increase its
customer base and generate long-term profitability.
Apart from Rite Aid, other stocks such as
Core Laboratories NV
Drew Industries Inc.
) touched new 52-week highs of $71.18, $177.08 and $47.19,
respectively, on Oct 7.
CORE LABS NV (CLB): Free Stock Analysis
CONOCOPHILLIPS (COP): Free Stock Analysis
DREW INDS INC (DW): Free Stock Analysis
RITE AID CORP (RAD): Free Stock Analysis
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