Rite Aid Corporation's (NYSE:RAD) About To Shift From Loss To Profit

By
Simply Wall St
Published
April 19, 2021
NYSE:RAD

Rite Aid Corporation (NYSE:RAD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Rite Aid Corporation, through its subsidiaries, operates a chain of retail drugstores in the United States. On 27 February 2021, the US$860m market-cap company posted a loss of US$100m for its most recent financial year. Many investors are wondering about the rate at which Rite Aid will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Rite Aid

According to the 4 industry analysts covering Rite Aid, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$2.9m in 2022. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 51% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
NYSE:RAD Earnings Per Share Growth April 19th 2021

Underlying developments driving Rite Aid's growth isn’t the focus of this broad overview, though, bear in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we would like to bring into light with Rite Aid is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Rite Aid which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Rite Aid, take a look at Rite Aid's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:

  1. Valuation: What is Rite Aid worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Rite Aid is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Rite Aid’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Promoted
When trading Rite Aid or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.


This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.


Simply Wall St character - Warren

Simply Wall St

Simply Wall St is a financial technology startup focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of equity analysts with a public, market-beating track record. Learn more about the team behind Simply Wall St.