Family Dollar (FDO) is still garnering attention from investors 2 months after its latest earnings report. Estimates are still rising and shares are defying the recent downturn.
Company Description
Family Dollar operates almost 7,000 stores across the U.S. The retailers offer a variety of items ranging from clothing to hardware, food to house wares. Family Dollar provides steep discounts appealing to lower income homes and those hit hard by the recent recession.
Bullish Revisions
The Zacks Consensus Estimate for Family Dollar has been climbing steadily over the past 3 months. Projections for this fiscal year, which ends in June, are averaging $2.59, up 29 cents.
Estimates for next year are up 39 cents, to an average of $2.96. If Family Dollar hits these levels, year over year growth will be 25% and 14%, respectively.
Beat the Street
Many of those revisions are coming as a result of the record-setting quarterly results that came on Apr 7. Family Dollar reported earnings per share of 81 cents, a 35% jump from the previous year. At the time analysts were expecting 78 cents, marking the fourth consecutive earnings surprise.
Family Dollar has met or exceeded expectations in each quarter for the past 5 years.
The recent surprise came on sales that grew 5%, eclipsing the $2 billion mark. Comparable stores improved 3.6% on both traffic and average ticket price.
Optimistic Outlook
Thanks to the strong quarter, management was confident enough to project a 20-25% increase in EPS, between $2.48 and $2.58. Family Dollar has seen strong sales momentum that bodes well for the remainder of the year.
The next sales announcement is due on Jun 3, which should indicate any changes in that sentiment.
The Chart
While most stocks have taken a hit in the recent slide stemming form the European debt worries, FDO continues to gain ground. Family Dollar recently set a new 52-week high and shares continue to demonstrate plenty of momentum.
Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service Zacks Investment Research
