Family Dollar, Inc. (FDO) recently surged to a new 52-week high after the company raised it’s full year guidance on strong February sales.
Company Description
Family Dollar operates a chain of self-service retail discount stores for lower to mid-income consumers in the United States. The company was founded in 1959, operates 6,600 stores in 44 states and has a market cap of $4.91 billion.
First-Quarter Results
Value retailers continue to do well in the weak economy and consumers focus on cutting spending. This dynamic helped FDO produce better than expected Q1 results, reported on Jan 6. Sales were up 3.9% from last year to $1.82 billion. Earnings came in at 49 cents per share, 2 cents ahead of the Zacks Consensus Estimate. The company has either matched or beat in each of the last four quarters by an average of 5%.
Family Dollar gained in a couple key categories, with gross margin expanding more than 1% to 36.1%. The company is also managing its inventories more effectively, with inventories down 5.9% from last year to $1.028 billion. Average stores inventories were down 7% from last year.
Estimates Rising
Estimates ticked higher on the good quarter, with the current year adding 8 cents to $2.38. The next-year estimate is up 10 cents in the same time to $2.67, a 12% growth projection.
FDO still looks reasonably priced in spite of recent gains, trading with a forward P/E multiple of 15X, a slight discount to the overall market.
The Chart
Shares of FDO recently jumped to a new 52-week high after raising its full-year guidance on strong February sales. Take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service. Zacks Investment Research
