Discounted Cash Flow Calculation for DB:RTA using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:RTA DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Rite Aid's share price is below the future cash flow value, and at a moderate discount (> 20%).
Rite Aid's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Rite Aid's earnings available for a low price, and how does
this compare to other companies in the same industry?
Unable to determine if Rite Aid is high growth as no earnings estimate data is available.
Rite Aid's revenue is expected to decrease over the next 1-3 years, this is not considered high growth.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Rite Aid's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. John T. Standley has been the Chief Executive Officer of Rite Aid Corporation since June 24, 2010. Mr. Standley served as the President of Rite Aid Corporation from September 25, 2008 to June 2013 and its Chief Operating Officer from September 2008 to June 2010. He served as the Chief Executive Officer of Pathmark Stores Inc. from August 29, 2005 to December 2007. Mr. Standley served as the Chief Financial Officer of Rite Aid Corp. from January 9, 2004 to August 2005 and served as its Senior Executive Vice President and Chief Administrative Officer from June 2002 to August 2005. He also served as a Consultant to Rite Aid from July 2008 to September 2008. He served as Senior Executive Vice President and Chief Financial Officer of Rite Aid Corporation from September 2000 to June 2002 and served as its Executive Vice President and Chief Financial Officer from December 1999 to September 2000. Mr. Standley served as an Executive Vice President and Chief Financial Officer of Fleming Companies Inc., a food marketing and distribution company from May 1999 to December 1999. Mr. Standley worked with The Yucaipa Companies to combine several regional grocery companies into Fred Meyer, Inc., from 1994 to 1999. From July 1998 to May 1999, he served as Senior Vice President and Chief Financial Officer of Fred Meyer, Inc. He served as Senior Vice President and Chief Financial Officer of Ralphs Grocery Company (Food 4 Less Holdings, Inc.) from January 1997 to July 1998. He has more than 30 years of retail, financial and executive experience and has an in-depth understanding of the food and drug retailing industries. Mr. Standley has spent the past 20 years in executive leadership roles in the grocery and pharmacy retail business. He served as Senior Vice President of Administration of Smith's Food & Drug Stores, Inc., from May 1996 to February 1997 and as Chief Financial Officer of Smitty's Supervalue, Inc., from December 1994 to May 1996. He has been the Chairman of National Association of Chain Drug Stores, Inc. since April 28, 2014 and serves as its Director. He served as a Vice Chairman of National Association of Chain Drug Stores, Inc. from April 2013 to April 28, 2014. He has been a Director of Rite Aid Corp. since June 2009. He served as a Director of CarMax Inc., from August 1, 2016 to January 29, 2018. He served as a Director of SUPERVALU Inc. from April 2013 to July 22, 2015. He was Chairman of Rite Aid Corporation from June 21, 2012 to October 30, 2018. He served as a Director of Pathmark Stores Inc. from August 2005 to December 2007. Mr. Standley is a Graduate of Pepperdine University.
John's compensation has increased whilst company is loss making.
John's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Rite Aid management team is less than 2 years, this suggests a new team.
CEO & Director
Chief Operating Officer
Executive Vice President of Pharmacy & Retail Operations
Chief Financial Officer
Chief Accounting Officer
Senior VP and Chief Information Officer
Senior Director of Treasury Services & Investor Relations
Chief Communications Officer & Senior VP
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Rite Aid board of directors is less than 3 years, this suggests a new board.
Rite Aid Corporation, through its subsidiaries, operates a chain of retail drugstores in the United States. It operates through two segments, Retail Pharmacy and Pharmacy Services. The Retail Pharmacy segment sells prescription drugs and a range of other merchandise, including over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, food and beverages, greeting cards, seasonal merchandise, and other every day and convenience products. It also operates retail clinics that provide treatment for common conditions; and a range of preventive services comprising screenings, medical tests, immunizations, and basic physical exams. In addition, this segment offers healthcare coaching and disease management services. The Pharmacy Services segment provides pharmacy benefit management (PBM) services and a range of pharmacy-related services. This segment also performs prescription adjudication services for other PBMs; and offers integrated mail-order, specialty and compounding pharmacy, and infertility treatment services, as well as drug benefits under the federal government's Medicare Part D program. As of April 12, 2018, the company operated approximately 2,548 stores in 19 states. Rite Aid Corporation was founded in 1927 and is headquartered in Camp Hill, Pennsylvania.
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