Is Rite Aid (RAD) Poised to Surprise Q4 Earnings Estimates? - Analyst Blog

An image of a stock chart
Credit: Shutterstock photo

Drug store retailer, Rite Aid CorporationRAD is slated to report its fourth-quarter fiscal 2015 results on Apr 8, before the opening bell. In the last quarter, the company had delivered a positive earnings surprise of 100%. Let's see how things are shaping up for this announcement.

Factors Influencing This Quarter

Riding on robust third-quarter performance that gained from strong same-store sales (comps) and improved gross margin, Rite Aid raised its sales, adjusted EBITDA, net income and earnings per share guidance for fiscal 2015. Moreover, the company is gaining from its stringent focus on strengthening its portfolio of health and wellness services. In keeping with this strategy, the company intends to remodel 450 stores to the wellness store format in fiscal 2015.

Further, Rite Aid has been focused on driving growth through expansion of its pharmacy and clinical services for a long time now. In line with this strategy, the company recently introduced a brand new outlet in Harrisburg, PA, spanning over 14,500 square feet.

Additionally, the company reported a 4.5% increase in comps for the 13 weeks ended Feb 28, 2015 on the back of robust Pharmacy and front-end comps. Given the company's positive comps performance for the fourth quarter, we expect it to post solid results in the upcoming quarter.

Earnings Whispers?

Our proven model does not conclusively show that Rite Aid is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Rite Aid currently has an Earnings ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 7 cents.

Zacks Rank: Rite Aid carries a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult. We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Walgreens Boots Alliance Inc. WBA has an Earnings ESP of +1.06% and a Zacks Rank #3.

Bed Bath & Beyond Inc. BBBY has an Earnings ESP of +2.76% and a Zacks Rank #3.

CarMax Inc. KMX Earnings ESP stands at +1.21% and it carries a Zacks Rank #3.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

RITE AID CORP (RAD): Free Stock Analysis Report

BED BATH&BEYOND (BBBY): Free Stock Analysis Report

CARMAX GP (CC) (KMX): Free Stock Analysis Report

WALGREENS BAI (WBA): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics

Earnings Stocks

Latest Markets Videos


    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

    Learn More