IB Net Payout Yields Model

Rite Aid: Disaster Continues

As investors were warned, Rite Aid (RAD) was only going to head lower following the 1-for-20 reverse split. The company provided the following financial targets for FY20:

  • Sales to be between $21.5 billion and $21.9 billion in fiscal 2020 
  • Same store sales expected to range from an increase of 0.0 percent to an increase of 1.0 percent over fiscal 2019.
  • Net loss is expected to be between $170.0 million and $220.0 million. 
  •  Adjusted EBITDA is expected to be between $500.0 million and $560.0 million. 
  •  Adjusted net (loss) income per share is expected to be between a loss of $0.01 and income of $0.04.

These are not the numbers investors want to see in a competitive environment where Walgreens (WBA) and CVS Health (CVS) are already dealing with competitive impacts from Amazon (AMZN) entering the pharmacy space. The likelihood of Rite Aid recovering isn't very high.
Avoid or short the stock that keeps hitting new lows including the $6s in after-hours trading.

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