Rite Aid (RAD:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Rite Aid(RAD:NYS)

Consumer Defensive:Pharmaceutical Retailers

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$0.89 (USD) 16/01/2019

Weighted Valuation
$1.00 (USD)

Overall Rating
Undervalued by 12.6%

Valuation Models Analyst Consensus: $1.00 (USD)
(in order of importance)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (RAD:NYS USD)

Price 0.89
Range 0.86 – 0.90
52 week 0.64 – 2.32
Open 0.90
Vol / Avg. 11.49M/18.93M
Mkt cap 947.6M
P/E 0.00
Div/yield 0.00/0.00
EPS 0.90
Shares 1.07B
Beta 1.80

Company Description

Rite Aid is a large retail drugstore chain in the United States. The company reports via two segments: retail pharmacy and pharmacy services. The retail pharmacy segment generates revenue primarily through the sale of prescription drugs, along with an assortment of merchandise that includes over-the-counter medications, health and beauty aids, personal-care items, cosmetics, household items, food and beverages, greeting cards, seasonal merchandise and numerous other everyday consumables. The pharmacy-services segment relates to EnvisionRx, a fully owned subsidiary that operates as a pharmacy benefit management provider offering a broad range of pharmaceutical services.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for RAD:NYS

Using a discounted cash flow model we generated an intrinsic value of $40.32 (USD) for RAD:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

RAD:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $40.32 1% 5% 1% 5%
WACC (or Ke) 6.80 $48.55 $34.61
Terminal Growth Rate 1.80 $34.28 $49.38
Tax Rate -7.03 $40.68 $39.96
Cash Flow 612,000,383 $35.97 $44.68
Capital Expenditures -382,442,600 $38.48 $42.16
Long Term Debt 7,244,696,000 $40.66 $39.98

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $1.38 (USD) for RAD:NYS. We also generated a valuation of $1.71 (USD) using other metrics and comparables.
The comparable companies were Andersons (ANDE:NAS), Big Lots (BIG:NYS), Core-Mark Holding Co (CORE:NAS), Pricesmart (PSMT:NAS) and Weis Markets (WMK:NYS).

Company RAD:NYS End Date Value
Earnings/Share $0.59 (USD)
Book Value/Share $1.36 (USD)
Sales/Share $20.51 (USD)
Cash Flow/Share ($0.09) (USD)
EBITDA/Share $0.52 (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 50.1
$2.32 (USD) 0.0
$3.80 (USD) -88.5
($3.21) (USD) -53.4
$0.00 (USD) 64.0
RAD:NYS Ratios Used Average Values ANDE:NAS BIG:NYS CORE:NAS PSMT:NAS WMK:NYS
0.00 PE Ratio 15.55 9.70 7.99 24.47 24.22 11.35
0.52 PB Ratio 1.70 1.04 1.95 1.88 2.38 1.26
0.03 PS Ratio 0.30 0.26 0.23 0.07 0.56 0.37
0.00 PCF Ratio 10.44 19.58 4.59 6.10 14.90 7.06
0.00 EV to EBITDA 9.67 10.38 4.77 12.74 13.94 6.53

Multiples

Using a multiples approach we generated a valuation of  $9.00 (USD) for RAD:NYS

Company RAD:NYS End Date Value
Earnings/Share $0.59 (USD)
Book Value/Share $1.36 (USD)
Sales/Share $20.51 (USD)
Cash Flow/Share ($0.09) (USD)
EBITDA/Share $0.52 (USD)
Price Based on Comps Adjustment Factor
$15.59 (USD) 0
$10.08 (USD) 0
$4.64 (USD) 0
$0.00 (USD) 0
$5.71 (USD) 0
Ratios Ratio Average
PE Ratio 26.42
PB Ratio 7.40
PS Ratio 0.23
PCF Ratio 10.55
EV to EBITDA 11.06

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  RAD:NYS for the last 4 years was  7.28

We ran the Adjusted Book Value for  RAD:NYS and generated a book value of  $1.36 (USD)
By multiplying these we get an adjusted valuation of  $9.92 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for RAD:NYS. The 2 analysts have a concensus valuation for RAD:NYS for 2020 of $1.00 (USD).

RAD:NYS Rite Aid

No analyst recommendation
Current Price: not available

No analyst consensus

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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