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Factors Likely to Influence Rite Aid (RAD) in Q4 Earnings

Rite Aid Corporation RAD is scheduled to report fourth-quarter fiscal 2023 results on Apr 20, before the opening bell.

The Zacks Consensus Estimate for the fiscal fourth-quarter bottom line is pegged at a loss of 77 cents, suggesting growth of 52.8% from the loss of $1.68 reported in the year-ago quarter. The consensus mark has been unchanged in the past 30 days. The Zacks Consensus Estimate for its fiscal fourth-quarter revenues is pegged at $5.7 billion, suggesting a 6% decline from the prior-year quarter’s reported figure of $6.1 billion.

In the last reported quarter, RAD witnessed a positive earnings surprise of 56.3%. The company has a trailing four-quarter earnings miss of 38.1%, on average.

Key Factors to Note

Rite Aid has been gaining from its expanded home delivery service to customers with an eligible prescription, with the benefit of a zero delivery fee. It has also been providing pickup and drive-through services for prescriptions and over-the-counter products at its stores. RAD launched the Buy Online Pickup In Store initiative to offer better drive-through and curbside pickup options.

The company has been focused on accelerating growth of riteaid.com’s e-commerce sales and expanding its buy online, pick up at store offerings. Continued strength in on-demand delivery, third-party marketplaces, and buy online, pick up at store options are likely to have aided the company’s performance in the to-be-reported quarter.

Rite Aid has been focusing on strengthening its foothold in mid-market PBM, innovating across its retail and mail-order pharmacy channels, enhancing the in-store experience by curating digital offerings, improving merchandise, and rebranding its image with a new logo.

Rite Aid’s Stores of the Future and the acquisition of Bartell are anticipated to have helped expand the customer base. Alongside this, it launched a loyalty program to improve front-end margins, expanded its brands and enhanced PBM margins via its new rebate aggregation agreement. The company has been making efforts to grow the Elixir membership and reposition its approach to the Elixir Insurance Part D business. These efforts are likely to have boosted earnings in the fiscal
fourth quarter.

In its last earnings report, management raised its sales view for fiscal 2023 on the back of strength in the Elixir business, increased non-COVID prescriptions and lower SG&A. Management anticipated revenues of $23.7-$24 million compared with the earlier mentioned $23.6-$24 million and our estimate of $23.7 billion. The Retail Pharmacy segment’s revenues were predicted to be $17.4-$17.6 billion compared with the prior stated $17.35-$17.65. The Pharmacy Services segment’s revenues are expected to be $6.3-$6.4 billion, which compares favorably with the previously communicated $6.25-$6.35 billion.

However, Rite Aid’s Retail Pharmacy and Pharmacy Services segments have been sluggish. The company has been witnessing muted demand for flu immunizations and COVID-19 vaccines, as well as the adverse impacts of closed stores, and reduced Elixir insurance memberships. Such factors are likely to have dented Rite Aid’s top-line performance in the fiscal fourth quarter.

As a result, management trimmed the adjusted EBITDA view for fiscal 2023. Adjusted EBITDA is anticipated to be $410-$440 million compared with the earlier stated $450-$490 million and our estimate of $440 million, induced by the expectations of cautious consumer demand and supply-chain headwinds. The Retail Pharmacy segment’s adjusted EBITDA is predicted between $265 million and $285 million, down from the prior stated $305-$335 million. The Pharmacy Services segment’s adjusted EBITDA is projected to be $145-$155 million.

Rite Aid Corporation Price and EPS Surprise

 

Rite Aid Corporation Price and EPS Surprise
Rite Aid Corporation Price and EPS Surprise

Rite Aid Corporation price-eps-surprise | Rite Aid Corporation Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Rite Aid this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Rite Aid has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

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

Asbury Automotive Group ABG currently has an Earnings ESP of +1.39% and a Zacks Rank #1. ABG is likely to register top and bottom-line declines when it reports first-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.6 billion, suggesting a 6.1% decline from the figure reported in the prior-year quarter.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ABG’s fiscal first-quarter earnings is pegged at $7.94, suggesting a 14.4% decline from the $9.27 reported in the year-ago quarter. The consensus estimate for earnings has been unchanged in the past 30 days. ABG has delivered an earnings beat of 7.1%, on average, in the trailing four quarters.

Lowe’s Companies LOW currently has an Earnings ESP of 1.32% and a Zacks Rank of 3. The company is expected to register a top-line decline when it reports first-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for LOW’s quarterly revenues is pegged at $21.9 billion, which suggests a decline of 7.6% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for Lowe’s earnings has been unchanged at $3.54 in the past 30 days. However, the consensus estimate for loss suggests an improvement of 0.9% from the year-ago quarter’s reported figure of $3.51 per share. LOW has delivered a bottom-line miss of 4.4%, on average, in the trailing four quarters.

Target Corporation TGT currently has an Earnings ESP of +1.38% and a Zacks Rank #3. TGT is anticipated to register top-line growth when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $25.4 billion, indicating an improvement of 0.8% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Target’s earnings of $1.77 per share has moved up by a penny in the past 30 days. The consensus estimate suggests a decline of 19.2% from the $1.77 reported in the year-ago quarter. TGT has delivered an earnings miss of 16.1%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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