Today’s Research Reports on Stocks to Watch: Rite Aid and Walgreens

Walgreens may have ended in the red on Thursday but the stock was the best performer on the DOW after reporting fourth quarter results. Shares of Rite Aid were trailing and closed down over 6% despite the company not having any news.     

RDI Initiates Coverage on:

Walgreens Boots Alliance, Inc.

Rite Aid Corporation

Walgreens Boots Alliance, Inc. shares were down nearly 2% on Thursday on about 14.5 million shares traded. The drug store chain retailer announced fourth quarter results. This was the company’s first earnings report as an index member. The stock became the best performer on the Dow yesterday, hitting as high as $74.38, despite the close in the red. Walgreens reported adjusted earnings per share (EPS) of $1.48, beating street’s estimate of $1.45. CEO Stefano Pessina said on the earnings call, "I am particularly pleased with the strong full year adjusted earnings per share growth, up 18%, meaning that we have delivered mid-teens compound annual growth since WBA’s inception. A significant feature of our growth has been our strong cash generation, which continued to develop well this year. These strong and resilient cash flows stem from the important role that our pharmacy businesses play in national health care systems and in the daily lives of our customers." The company also announced that it would make investments of about $150 million to boost mainly its in-store wages in fiscal 2019. "We will be making select incremental investments of around $150 million in fiscal 2019, mainly in store wages, but also to fuel our new community health care initiatives, and you can view these in light of the favorable tax reforms in the US," Walgreens stated.

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Rite Aid Corporation shares were down 6.31% yesterday on about 22.6 million shares traded. There was no particular news from the company but fellow drugstore retailer Walgreens reported financial results. Rite Aid reported its own second quarter results last month. The company reported adjusted net loss from continuing operations of $7.9 million or $0.01 loss per share. In the year ago quarter Rite Aid had reported an adjusted net loss of $17.4 million or $0.02 per share. Results were in line with what analysts had expected. CEO John Standley said on the earnings call, " Adjusted EBITDA from continuing operations was $148.6 million, compared to $136.9 million for the same period last year, and prior year pro forma adjusted EBITDA from continuing operations of $160.9 million. Prior year pro forma adjusted EBITDA from continuing operations includes $24 million of fees that would have been earned if all of the stores that were sold to WBA were supported under the TSA for that period.” He also said, "A key highlight of the quarter was our success in driving top-line momentum in terms of revenue, same-store sales and prescription count.” Revenues from continuing operations for the quarter were $5.4 billion, compared to $5.3 billion in the prior year period. Revenue increased in both segments with the growth in the Retail Pharmacy segment being driven by a 1% increase in same-store sales consisting of Pharmacy sales growth 1.6% and 0.6% decrease in front-end sales. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 1.1 percent compared to the prior year period. Prescription sales from continuing operations accounted for 66.4 percent of total drugstore sales.

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Our Actionable Research on Walgreens Boots Alliance, Inc. (NASDAQ: WBA) and Rite Aid Corporation (NYSE: RAD) can be downloaded free of charge at Research Driven Investing.

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