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Factors Setting the Tone for Rite Aid's (RAD) Q1 Earnings

Rite Aid Corporation RAD is scheduled to report first-quarter fiscal 2021 results on Jun 25, before the opening bell. Notably, the company has a positive earnings surprise of 191.4%, on average, for the trailing four quarters.

The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings is pegged at a loss of 54 cents per share, which indicates a significant decline from a loss of 14 cents reported in the year-ago quarter. Notably, the consensus mark remained stable in the past 60 days. For revenues, the consensus mark is pegged at $5,599 million, suggesting growth of 4.2% from the year-ago quarter’s reported figure.

Factors to Note

Rite Aid has been gaining from its efforts to provide home delivery services amid the COVID-19 crisis at zero costs to those with an eligible prescription. Further, it is offering pick-up services for prescriptions and over-the-counter products, with a drive-through option available at more than 50% of its retail locations. In its latest move to enhance customer experience, Rite Aid launched a pay-and-go facility in a bid to expedite the prescription pick-up service in both stores and drive through. Moreover, the company is partnering with Instacart and on track to introduce more convenient delivery options for customers who shop from stores. Additionally, the company introduced an Amazon pickup solution at every Rite Aid store. Management is also on track to introduce self-checkout across 400 more stores by fiscal 2021. These moves are expected to have improved traffic and hence, contribute to the company’s top line in the first quarter.

Moreover, management remains focused on strengthening its foothold in mid-market PBM, bringing innovation across its retail and mail-order pharmacy channels, enhancing the in-store experience by curated digital offerings, improving merchandises and rebranding its image with a new logo. Notably, the company has been witnessing a significant uptick in PBM, in terms of mail orders, as customers are increasingly hoarding 90-day refills in the wake of COVID-19. Alongside this, rising demand for prescription files is likely to help the company double its pharmacy business in the near term.

Apart from these, the company has been investing in the expansion of EnvisionRxOptions, especially its services, technologies and clinical offerings. The company has also partnered with UNFI for introducing the Wild Harvest brand in Rite Aid stores. Such well-chalked endeavors have been boosting the company’s wellness offerings.

However, it has been witnessing weak adjusted EBITDA for the past few quarters, which remains a threat to the bottom line in the quarter under review. Further, any decline in front-end sales and supply-chain disruptions stemming from the ongoing pandemic might have hurt its fiscal first-quarter results.

Rite Aid Corporation Price and EPS Surprise

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 but an Earnings ESP of 0.00% makes surprise prediction difficult.

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:

Fastenal Company FAST has an Earnings ESP of +5.88%. It has a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

CarMax KMX has an Earnings ESP of +59.70%. It currently carries a Zacks Rank #3.

Kimberly-Clark Corporation KMB currently has an Earnings ESP of +1.78% and a Zacks Rank #3.

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KimberlyClark Corporation (KMB): Free Stock Analysis Report
 
Rite Aid Corporation (RAD): Free Stock Analysis Report
 
Fastenal Company (FAST): Free Stock Analysis Report
 
CarMax, Inc. (KMX): Free Stock Analysis Report
 
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