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Factors Likely to Influence Rite Aid's (RAD) Q1 Earnings

Rite Aid Corporation RAD is scheduled to report first-quarter fiscal 2022 results on Jun 24, before the opening bell. The drugstore retailer is likely to have witnessed revenue and earnings growth in the to-be-reported quarter.

The Zacks Consensus Estimate for its fiscal first-quarter revenues is pegged at $6.17 billion, suggesting a 2.3% increase from the prior-year quarter’s reported figure of $6.03 billion. The Zacks Consensus Estimate for fiscal first-quarter earnings is pegged at 42 cents, whereas it reported a loss of 4 cents in the year-ago quarter. Notably, the consensus mark has been unchanged in the past 30 days.

In the last reported quarter, the drugstore retailer’s earnings beat estimates by 1.3%. Moreover, the company has an earnings surprise of 1,080.3%, on average, for the trailing four quarters.

Rite Aid Corporation Price and EPS Surprise

 

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

Factors to Note

Rite Aid has been gaining from the expansion of services since the onset of the pandemic. Notably, the company has been offering home delivery services to customers with eligible prescriptions, with the benefit of zero delivery fees. Customers can avail of pick-up services for prescriptions and over-the-counter products as well as the drive-through option. Moreover, the company has launched Buy Online Pickup In Store initiative to offer better drive-through and curbside pickup options. Apart from these, Rite Aid’s partnerships with Amazon, Postmates and Instacart for home delivery have been aiding digital sales. Also, the company partnered with ScriptDrop to expedite the prescription delivery process. Moreover, the surge in demand for Tele Health in the wake of the pandemic has led the company to accelerate the launch of Rite Aid Virtual Care.

Also, the fiscal first quarter is likely to have gained from the solid performance in PBM, in terms of mail orders. That said, its new RxEvolution strategy, with the help of which Rite Aid is likely to become a leader in mid-market PBM, has been on track. The endeavors are expected to have aided the top line in the quarter under review.

Further, management is optimistic regarding growth in Elixir, on the back of rise in Medicare Part D membership and its newly launched member portal for Elixir customers. In fact, Rite Aid, on its last reported quarter’s earnings call, highlighted that its plans to restructure the Elixir insurance business are likely to be accretive to the business in fiscal 2022.

However, the company’s first-quarter fiscal 2022 is expected to have been affected by the slowing demand for COVID-19 testing as well as delayed elective procedures and their impacts on acute scripts. Moreover, lesser cases of cough, cold and flu, and unfavorable weather are expected to have been concerning for the Retail Pharmacy segment, which is anticipated to witness a same-store sales decline of 9-7% for the first quarter of fiscal 2022.

Also, reduced acute scripts, headwinds related to reimbursement rate and rising SG&A costs related to the pandemic are anticipated to have hurt Rite Aid’s bottom line in the fiscal first quarter. On the last reported quarter’s earnings call, management envisioned net income/loss for the quarter under review between a loss of $10 million and earnings of $10 million.

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

Bed Bath & Beyond, Inc. BBBY currently has an Earnings ESP of +24.14% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lowe’s Companies LOW has an Earnings ESP of +1.05%. It presently carries a Zacks Rank #2.

CVS Health Corporation CVS currently has an Earnings ESP of +3.88% and a Zacks Rank #3.

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