Is Rite Aid Corporation (NYSE:RAD) a Buy Or Sell At the CMP?

Medical store chain Rite Aid has seen its stock have a pretty tough time in recent days, and its stock remains volatile even though its peer Walgreens rebounded from its worst fall. In this regard, it needs to be pointed out that investors have not been particularly happy with the stock for quite some time.

In 2018, Rite Aid Corporation (NYSE:RAD) saw its revenues drop substantially, and since then, it has struggled. The stock has nosedived from its 52 weeks high by as much as 40% and was trading at $14.33 at the end of April.

Earnings Recap

In the fourth quarter, the company reported a net loss of as much as $344 million, and that worked out to losses of $6.43 a share. The losses as per GAAP stood at $266 million. On the other hand, the revenue rose by only 0.6%. While Rite Aid stated that the coronavirus pandemic had not had a big effect on its business yet, it went on to state that it is still hard to predict, and the situation remains fluid. However, one of the biggest reasons behind Rite Aid’s fall from grace seems to be the intense competition in this particular sector.

The entry of e-commerce giant Amazon’s entry into the online medical store space has made things pretty difficult for many medicine store chains, and Rite Aid is no exception. On the other hand, the company’s main competitors are handling the situation far better. For instance, companies like Walgreens and CVS Health have managed to weather the storm somewhat. As a matter of fact, CVS Health reported revenues of $36 billion in Q2 and has given fierce competition to Rite Aid. While Rite Aid has tied up with the United States Department of Health and Human Services regarding coronavirus testing, it is unlikely to boost its top line or bottom line much. While the current stock price might seem like a bargain, Rite Aid might not be a sound investment at this point.

About Travis Garlick 1791 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.