Earnings Previews: Darden Restaurants, KB Home, Rite Aid, Winnebago

Rite Aid

Drugstore operator Rite Aid Corp. (NYSE: RAD) reports fiscal 2023 first-quarter results first thing Thursday. Over the past 12 months, the share price has plunged by about 69%. The stock has traded above the break-even line since late last June, as Rite Aid has been buffeted by competition, opioid litigation and a credit rating downgrade.

In an interview with the Washington Post last week, CEO Heyward Donigan said, “The pharmacy of the future is going to start with your phone.” Investors are going to want to know more details, especially about how much such a transition will cost and how Donigan expects to finance it.

Just three analysts pay attention to the shares, and none rates the stock above a Sell. At a share price of around $6.20, the stock is trading above its median price target of $4.00. Upside potential based on a high price target of $8.00 is 29%.

First-quarter revenue is expected to come in at $5.73 billion, down 5.5% sequentially and 7.0% year over year. The adjusted loss per share is forecast at $0.70, compared to a loss per share of $1.63 in the prior quarter and a loss per share of $0.38 in the first quarter of last year. For the full 2023 fiscal year ending in February, Rite Aid is expected to post a loss per share of $1.41, compared to last year’s loss of $1.51. Revenue is expected to drop by 6.7% to $22.91 billion.

Rite Aid is also not expected to post a profit in 2023, 2024 or 2025. The company’s enterprise value to sales multiple for each of the three fiscal years is 0.3. The stock’s 52-week range is $4.68 to $20.95. Rite Aid does not pay a dividend. Total shareholder return for the past year was negative 69.2%.


Recreational vehicle maker Winnebago Industries Inc. (NYSE: WGO) has dropped about 26.9% from its value over the past 12 months. Over the past two years, the share price has tumbled by about 33%. The stock posted an all-time high in March of last year and a 52-week low less than a month ago. Like rival Thor Industries, Winnebago faces inventory issues as inflation and a possible recession take the air out of spending on expensive discretionary goods. While quarterly results may be okay, guidance will be investors’ focus. The company reports quarterly results early Wednesday.

Of 12 analysts covering the stock, eight have a Buy or Strong Buy rating and the others have a Hold rating. At a share price of around $45.20, the upside potential to a median price target of $72.00 is 59.3%. At the high price target of $85.00, the upside potential is 88%.

Fiscal third-quarter revenue is forecast at $1.21 billion, down 4.7 sequentially but up 25.9% year over year. Adjusted EPS are forecast at $2.96, down 5.8% sequentially and up 37% year over year. For the full 2022 fiscal year ending in August, current estimates call for EPS of $12.23, up 43%, on sales of $4.64 billion, up 28%.

Winnebago stock trades at 3.7 times expected 2022 EPS and 4.8 times estimated 2023 earnings of $9.42. The stock’s 52-week range is $43.05 to $80.30. Winnebago pays an annual dividend of $0.60 (yield of 1.59%). Total shareholder return for the past year was negative 26.9%.

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