Contrasting Rite Aid (RAD) & Express Scripts (ESRX)

Express Scripts (NASDAQ: ESRX) and Rite Aid (NYSE:RAD) are both medical companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, valuation, earnings, risk, analyst recommendations and profitability.

Volatility & Risk

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Express Scripts has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, Rite Aid has a beta of 1.8, indicating that its share price is 80% more volatile than the S&P 500.

Valuation & Earnings

This table compares Express Scripts and Rite Aid’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Express Scripts $100.06 billion 0.40 $4.52 billion $7.10 10.09
Rite Aid $21.53 billion 0.08 $4.05 million ($0.02) -84.00

Express Scripts has higher revenue and earnings than Rite Aid. Rite Aid is trading at a lower price-to-earnings ratio than Express Scripts, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

89.4% of Express Scripts shares are owned by institutional investors. Comparatively, 47.5% of Rite Aid shares are owned by institutional investors. 0.8% of Express Scripts shares are owned by insiders. Comparatively, 2.3% of Rite Aid shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Express Scripts and Rite Aid’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Express Scripts 4.51% 25.19% 8.00%
Rite Aid 3.60% -8.25% -0.71%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Express Scripts and Rite Aid, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Express Scripts 3 11 5 0 2.11
Rite Aid 2 5 1 0 1.88

Express Scripts currently has a consensus price target of $81.82, suggesting a potential upside of 14.24%. Rite Aid has a consensus price target of $2.31, suggesting a potential upside of 37.28%. Given Rite Aid’s higher probable upside, analysts plainly believe Rite Aid is more favorable than Express Scripts.

Summary

Express Scripts beats Rite Aid on 11 of the 14 factors compared between the two stocks.

Express Scripts Company Profile

Express Scripts Holding Company operates as a pharmacy benefit management (PBM) company in the United States and Canada. The company's PBM segment offers clinical solutions; and specialized pharmacy care, home delivery and specialty pharmacy, retail network pharmacy administration, benefit design consultation, drug utilization review, drug formulary management, public exchange, administration of group purchasing organization, and digital consumer health and drug information services. This segment also provides Medicare, Medicaid, and health insurance marketplace products; Express Scripts SafeGuardRx, a suite of solutions targeting the therapy classes that pose clinical challenges and budgetary threat to its clients; and Inside Rx, a program that provide affordable access to medication for uninsured and underinsured individuals. Its Other Business Operations segment distributes specialty pharmaceuticals and medical supplies, including injectable and infusible pharmaceuticals and medications to treat specialty and rare/orphan diseases. This segment also provides medical benefit management solutions for radiology, cardiology, musculoskeletal disorders, sleep disorders, post-acute care, genetic lab, specialty pharmacy, and medical oncology. The company serves managed care organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers' compensation plans, government health programs, providers, clinics, hospitals, and others. As of December 31, 2017, it operated 4 automated dispensing home delivery pharmacies; 1 non-automated dispensing home delivery pharmacy; 7 non-dispensing order processing centers; 5 patient contact centers; 9 specialty home delivery pharmacies; and 34 specialty branch pharmacies. The company was formerly known as Aristotle Holding, Inc. and changed its name to Express Scripts Holding Company in April 2012. Express Scripts Holding Company was founded in 1986 and is headquartered in Saint Louis, Missouri.

Rite Aid Company Profile

Rite Aid Corporation, through its subsidiaries, operates a chain of retail drugstores in the United States. The company operates through Retail Pharmacy and Pharmacy Services segments. The Retail Pharmacy segment sells prescription drugs; and a range of other merchandise, such as over-the-counter medications, health and beauty aids, personal care items, cosmetics, household items, food and beverages, greeting cards, seasonal merchandise, and other everyday and convenience products. This segment also operates retail clinics that provide treatment for common conditions; and a range of preventive services, including screenings, medical tests, immunizations, and basic physical exams. In addition, this segment provides healthcare coaching and disease management services. The Pharmacy Services segment provides pharmacy benefit management (PBM) services and a range of pharmacy-related services. This segment also performs prescription adjudication services for other PBMs; offers integrated mail-order and specialty and compounding pharmacy services; and provides infertility treatment, as well as drug benefits under the federal government's Medicare Part D program. As of June 20, 2017, the company operated approximately 4,500 stores in 31 states of the United States and in the District of Columbia. Rite Aid Corporation was founded in 1927 and is headquartered in Camp Hill, Pennsylvania.

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