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In this article, I will feature one drug store that has seen intensive insider selling during the last 30 days. Intensive insider selling can be defined by the following three criteria:

  1. The stock was sold by three or more insiders within one month.
  2. The stock was not purchased by any insiders in the month of intensive selling.
  3. At least two sellers decreased their holdings by more than 10%.

Rite Aid Corporation (RAD) operates retail drugstores in the United States.

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Insider selling during the last 30 days

Here is a table of Rite Aid's insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares SoldRule 10b5-1Current OwnershipDecrease In Ownership
Robert K. ThompsonEVPOct 18250,000No157,911 shares + 250,000 options38.0%
Marc StrasslerEVPSep 27-Oct 17375,000No699,369 shares34.9%
Douglas DonleySVPOct 1788,700No81,628 shares52.1%
Frank VitranoCFOOct 11-141,982,900No1,183,384 shares62.6%
Tony MontiniEVPOct 4414,500No643,713 shares + 217,700 options32.5%
Green Equity Investors III LPAffiliate of directorSep 2734,000,000No6,000,00085%

There have been 37,111,100 shares sold by insiders during the last 30 days. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Rite Aid's insider-trading activity by calendar month.

MonthInsider selling / sharesInsider buying / shares
October 20132,836,1000
September 201334,675,0000
August 201300
July 20131,333,9320
June 201340,500,0000
May 201300
April 201373,885,2600
March 201300
February 201300
January 201300

There have been 153,230,292 shares sold and there have been zero shares purchased by insiders this year.

Financials

Rite Aid reported the fiscal 2014 second-quarter, which ended August 31, financial results on September 19 with the following highlights:

Revenue$6.3 billion
Net income$32.8 million
Cash$144.2 million
Debt$6.1 billion

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Outlook

Rite Aid's fiscal 2014 full-year guidance is as follows:

Revenue$25.1 billion - $25.3 billion
Adjusted EBITDA$1.24 billion - $1.30 billion
Net income$182.0 million - $268.0 million
Capital expenditures$400 million

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Competition

Rite Aid's competitors include GNC Holdings (GNC), CVS Caremark Corporation (CVS), and Walgreen (WAG). Here is a table comparing these companies.

CompanyRADGNCCVSWAG
Market Cap:4.69B5.61B75.35B56.03B
Employees:50,7306,000203,000173,000
Qtrly Rev Growth (yoy):0.010.090.020.05
Revenue:25.26B2.58B123.63B72.22B
Gross Margin:0.290.380.190.29
EBITDA:1.35B512.58M9.63B4.92B
Operating Margin:0.040.180.060.05
Net Income:296.50M264.80M4.22B2.45B
EPS:0.322.693.372.56
P/E:16.1521.9018.2223.12
PEG (5 yr expected):2.781.081.081.29
P/S:0.192.130.620.78

Rite Aid has the slowest revenue growth among these four companies.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
GNC0622,847
CVS0306,780
WAG117,98885,232

Only Rite Aid has seen intensive insider selling during the past 30 days.

Conclusion

There have been six different insiders selling Rite Aid and there have not been any insiders buying Rite Aid during the past 30 days. All six of these insiders decreased their holdings by more than 10%. Rite Aid has an insider ownership of 1.10%.

There are four analyst buy ratings, four neutral ratings, and zero sell ratings with an average price target of $5.01. Rite Aid is trading at a P/E ratio of 16.15 and a forward P/E ratio of 15.47. The company has a book value of -$2.78 per share.

Before entering short Rite Aid, I would like to get a bearish confirmation from the Point and Figure chart. The three main reasons for the proposed short entry are negative book value, bearish analyst price targets and the intensive insider selling activity.

Source: Insiders Are Selling Rite Aid