RAD stock is witnessing its biggest one day gain in the past 30 years after Rite Aid Corporation (NYSE:RAD) swung to a third-quarter profit.
The frenetic pace of seasonal earnings announcements may have ended, but some companies are still declaring their third-quarter results, and today, drugstore chain Rite Aid declared its financial results for the third quarter.
Beats Estimate
The company has been struggling for a long time, but in the third quarter, Rite Aid actually managed to record a profit, a rarity for the drugstore chain. In addition to that, it managed to beat analysts’ expectations comfortably. It goes without saying that this was a momentous occasion for the company.
The company announced that in the third quarter it generated a profit of as much as $51.5 million. It is a major swing for Rite Aid from the prior-year period when it had recorded a loss of $4.5 million. The company’s profit was primarily due to the retirement of some debt. That being said, the swing back to profits has been quite remarkable, and the climb in the share price is understandable.
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After the results were announced, RAD stock climbed significantly and recorded gains of as much as 45% at $12.08.
Wall Street analysts had estimated earnings per share to be 7 cents, but Rite Aid beat those estimates easily, generating earnings of 54 cents a share. Revenue for the quarter stood at $5.46 billion, which was also higher than Wall Street analysts’ estimates of $5.42 billion. Rite Aid is one of the biggest drugstore chains in the United States and operates as many as 2,400 stores spanning across as many as 18 states.
However, it has struggled to compete against larger competitors like Walgreens (NASDAQ:WBA) and CVS (NYSE:CVS) in recent years. It has suffered from reimbursement cuts, and the margins from a large number of products have gone down significantly.
Despite today’s big jump, RAD stock is still trading lower by 23% year to date.
Featured image: DepositPhotos © Alexstar
