In 2018, Walgreens acquired 1,923 Rite Aid stores for $4.4 billion in cash. What is left is the ELIXIR PBM organization.Īn estimation of how such an approach might play out will start with a valuation per store. One possible scenario for unlocking the value of RAD involves the sale of the Retail Pharmacy business and Rite Aid brand. Even now the stock has a much lower market capitalization than its main competitors, CVS and Walgreens. Rite Aid is a stock that has been trampled on in the past.
Comparing revenue to market capitalization of RAD to both Walgreens and CVS shows a significant upside to RAD's stock price.RAD owns a Prescription Benefits Management (PBM) service, now known as Elixir, currently generating an additional $8 billion in annual revenues.Rite Aid has a growing retail pharmacy business generating over $15 billion in annual revenues.16, 2021 5:59 PM ET by The Sound of Money (as seen on Seeking Alpha) Rite Aid, No Matter How You Cut It, It Is The Right Stock Most information to help you learn and practice can be found in our wiki. Related Subreddits (see the rules above for related subs as well) Read here for more info.Īlmost any post related to stocks and investment is welcome on /r/stocks, including pre IPO news, futures & forex related to stocks, and geopolitical or corporate events indicating risks outside this is offtopic and can be removed. Consider posting to r/SPACs, r/pennystocks, or r/weedstocks instead. No penny stock discussions, including OTC, microcaps, pump & dumps, low vol pumps and SPACs. Non-ETF-related Crypto goes on r/CryptoCurrencies info. No bitcoin or crypto discussions unrelated to stocks. Trolling, insults, or harassment, especially in posts requesting advice, will be removed. Posts regarding this topic will be automatically removed. The Robinhood app should be discussed in /r/Robinhood. Low effort mentions for meme stocks will be removed, see here. Instead, advertise here.Ĭontext & effort must be provided empty posts or empty posts with links will be automatically removed. Spam, ads, solicitations (including referral links), and self-promotion posts or comments will be removed and you might get banned. Rules (in depth rules wiki here)ĭisclose any related open positions when discussing a particular stock or financial instrument. When I run Rite Aid's stock, I find it's rated "dangerous." In other words, the stock is expensive relative to the cash the company is expected to generate over its lifetime.Almost any post related to stocks is welcome please read the rules below:Ĭlick here to find how many days old your account needs to be and how much karma you need before you can comment or post to r/Stocks. It's a complicated analysis made simple with a system from NewConstructs. Some investors decide if a stock is pricey by comparing its current price to the present value of its expected cash flows. Step 2: Measure the stock's discounted cash flow. That's not a great tradeoff and should stop many potential investors right there. So to get a 78% higher return you accepted 326% higher risk. That's much higher than the 15.5 percentage point risk of the S&P 500 during the period. This is a high return the S&P 500 posted a 10.4% annual return in the same time frame, says IFA.com.īut here's the rub: If you owned Rite Aid, you accepted higher risk - standard deviation - of 66 percentage points. Downloading Rite Aid's trading history back to 1980, we see the company generated an average annual compound rate of price appreciation of 18.5%. When you take a risk on a stock, you want to make sure you're properly rewarded. Since there's still interest, I'll put Rite Aid once more through the four financial tests we use to evaluate stocks:
You can read my most recent assessment here. I've written about the stock several times, usually concluding investors should look elsewhere. Rite Aid is a popular topic for Ask Matt questions.
Now, investors seem to be moving from worrying about companies' financial health to trying to gauge their profit potential and future growth. Such worries about the financial standing of drugstore chain Rite Aid were addressed here. And they were wary of companies that loaded up on debt during the borrowing boom. They wanted to make sure companies had enough cash to just stay in business. Though March, investors closely monitored companies' balance sheets. — - Q: What do you think of Rite Aid stock (RAD)?Ī: Investors are starting to move from trying to pick companies that can survive the recession, to those that can thrive.
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