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Leigh Drogen, Estimize (587 clicks)
Hedge fund trader, long/short equity
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Rite Aid (RAD) has experienced strong and steady growth throughout 2013. The American drug store chain had a particularly good month in September when it announced a better than expected financial report for FQ2 2014 and the stock price jumped up about 35% across the month. This year Rite Aid has made a massive run from $1.43 to $5.66 and is looking to carry its momentum into the new year.

Rite Aid is expected to report FQ2 2014 earnings before the market opens on Thursday, December 19th. The information below is derived from data submitted to the Estimize platform by a set of Buy Side and Independent analyst contributors.image

The current Wall Street consensus expectation is for RAD to report 4 cents EPS and $6.328B revenue while the current Estimize consensus from Buy Side and Independent contributing analysts is 5 cents EPS and $6.358B revenue.

The Estimize consensus is more accurate than Wall Street up to 69.5% of the time because it represents unbiased market expectations.. By tapping into a wider distribution of over 3,300 contributors including hedge fund and independent analysts as well as students and non professionals, Estimize is better able to capture the true market outlook. More analysts are contributing to the data set each week. This quarter marks the first time Rite Aid has been covered by the Estimize community.

The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a small differential between the consensuses. image

Over the past four months the Wall Street consensus trend for EPS has increased from 3 cents to 4 cents while Wall Street revenue expectations have increased from $6.286B to $6.328B. The Estimize EPS consensus is where it began at 5 cents and the revenue consensus has shot up from $6.336B to $6.358B at the end of the quarter.

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The distribution of estimates published by analysts on Estimize range from 1 cents to 7 cents EPS and $6.335B to $6.416B in revenues. This quarter Wall Street's EPS expectation falls within our analysts' range but each contributor to the Estimize data set is expecting more revenue than Wall Street is calling for. Additionally we're seeing a moderate distribution of estimates this quarter for RAD. The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A wider distribution signaling the potential for greater volatility post earnings, or smaller vice versa.image

The analyst with the highest estimate confidence rating this quarter is shaneleonard121 who projects 6 cents EPS and $6.349B in revenue. Estimate confidence ratings are calculated through algorithms developed by our deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the analyst with the top confidence rating is expecting more profit per share but less revenue compared to the community consensus.

This quarter the Estimize community is expecting a strong report out of Rite Aid. If Rite Aid can beat analyst expectations on Thursday we could see the drug-store company continue to ride its wave of momentum into 2014.

Disclosure: None.

Source: What Hedge Fund Analysts Are Saying About Rite Aid