Rite Aid (NYSE:RAD) En Route to Recovery
Rite Aid (NYSE:RAD) had a remarkable 2013, in which the company shares hiked to an impressive 272%. However, the current year hasn’t been very favorable for the company so far. According to the statistics released, the stock tumbled a significant 33% from its impressive $8 peak in May. These shortfalls have been due to poor figures posted in the two previous quarters. According to the management team, the blame has been placed on inability to achieve the cost-saving targets on the recently released drug, in collaboration with McKesson. In view of these drops, investors are quite concerned about the future of the invested stocks. The report due on Dec. 18 is highly anticipated and will be the decisive factor for the investors.
Rite Aid (NYSE:RAD) has had quite a rough time through the recession. In addition to this, the debts it has acquired due to its acquisition of Eckerd has put even more pressure on the capital status of the company. Just before the recession hit, the company was doing quite well and enjoying good returns. However, recession brought about thinning in consumer orders. This has led to redundant cash flows and lack of interest in investing in Rite Aid (NYSE:RAD) stocks.
However, with the recent significant price cuts as well as store closures, in addition to loan refinancing, Rite Aid (NYSE:RAD) seems to have retained some of its lost status. This has improved stock prices, with ascend from previous $1 in 2012, to a remarkable $5.50.
This improvement has regenerated investor interest, and it is being anticipated that cash flow will enhance as shares continue to climb. Furthermore, as a result of current collaboration with McKesson, Rite Aid (NYSE:RAD) has had its hopes strengthened. This was done in an effort to reduce procurement of the drugs and distributed costs that will ensure enough capital to put expansion plans to action.
The company also went on to acquire RedClinic, soon after its McKesson collaboration. RedClinic operates from 30 healthcare locations and runs in H-E-B grocery stores, located in Texas. This acquisition has helped Rite Aid (NYSE:RAD) establish itself in the Texan market, and give competition to rivals that are a much bigger structure than the company.
While a lot has happened for Rite Aid (NYSE:RAD), the synergy with McKesson has failed to deliver the desired goals and targets, instilling a concern in the management team that the expected returns might be a distant dream.
In the first quarter of the current fiscal year, the company reported $41 million in returns, which is a remarkable fall from its previous $89 million, in 2013. The current earning per share estimate has a range of $0.30 to $0.40, as opposed to its previous $0.31 to $0.42.
Even though, the figures achieved in November, as reported by the company seem assuring enough, the investors’ concerns haven’t weaned. The in-store sales went up 5.1% from its last year figures. Front-end sales have gone up 0.7%, whereas the pharmacy sales have gone up 7.1%. the prescription volume has gone up 4.2% in November.