Rite-Aid's Q1 earnings spark sell-off that is no buying opportunity

Rite-Aid (NYSE: RAD), a competitor of CVS (NYSE: CVS) and Walgreen (NYSE: WAG), tanked Thursday. By the end of the trading session, the pharmacy's stock declined almost 23% on heavy volume. Yes, it was a horrible day in the market overall, but don't blame the market at large. Rite-Aid is simply a company to avoid, and its latest earnings data show why.

According to the AP, Rite-Aid booked a loss of $0.20 per share for its fiscal first quarter versus a profit of $0.04 per share in the year-ago period. There are some growing pains going on here, since Rite-Aid is attempting to integrate its purchase of Brooks Eckerd. That acquisition propelled the company to top-line revenue growth of 48%. Unfortunately, analysts were looking for the company to lose only $0.09 per share. The significant differential made investors feel justified in punishing the stock. Heck, I'll bless the sell-off myself.

It'll be a long time before Rite-Aid finally turns its ship around. The next fiscal year will bring more losses, and with strong competition out there from CVS and Walgreen, the road ahead for management won't be for the faint of heart. This is truly a speculator's stock. I took a look at a post I wrote on Rite-Aid back near the beginning of April. At that time, the stock was priced at about $2.89 per share. As of Thursday's close, the shares were trading for $1.35. The Rite-Aid story belongs in the horror genre, and its stock is best left to those professionals who don't mind losing money. Individual investors? This company isn't for you, in my opinion.

Disclosure: I don't own any company mentioned; positions can change at any time.