Which of the Top 3 Drug Store Stocks Has the Strongest Earnings Trends?

Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).

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Here’s your Cheat Sheet to how the top 3 drug store stocks rank via earnings trends:

Rite Aid Corp. (NYSE:RAD): Current Price $1.57

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 24,330 26,290 25,670 25,210 26,120
Diluted EPS ($) -1.54 -3.49 -0.59 -0.64 -0.43

We note that sales have grown sluggishly at Rite Aid, and loss per share has narrowed a bit in 2012.

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Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Nov. 30, 2011 Feb. 29, 2012 May. 31, 2012 Aug. 31, 2012 Nov. 30, 2012
Revenue ($) in millions 6,313 7,147 6,468 6,231 6,238
Diluted EPS ($) -0.06 -0.19 -0.03 -0.05 0.07

Quarterly sales are flat, but finally, Rite Aid has produced a positive quarterly EPS in the latest quarter. We keep this company on our watch-list…

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