RAD – Market expectations are for Uniform ROA expansion, but management may be concerned about growth, their rebranding and coronavirus

• Rite Aid Corporation (RAD:USA) currently trades around corporate averages relative to UAFRS-based (Uniform) earnings, with a 23.0x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about customer growth, the success of their rebranding, and in coronavirus disruptions
  
  

• Specifically, management may be concerned about continued sales weakness and their ability to further improve working capital. Furthermore, they appear concerned about continued coronavirus headwinds going forward and the size of their current debt load. Additionally, they may lack confidence in the potential and timeline of their brand relaunch, and may have concerns about their infrastructure in terms of its ability to support digital growth at scale