Family Dollar Stores (FDO) has received a flurry of estimate revisions following its earnings announcement last week.
Company Description
Family Dollar Stores 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.
Great Year
On Sep 29 Family Dollar reported full-year fiscal 2010 results that showed a 23% jump in net income, to $358 million. Earnings broke down to $2.62 per share, up 27% from the previous year. Sales came in at $7.9 billion, up 6% from 2009.
The CEO said the company plans to ramp up revenue growth through renovation and increasing new store growth. Currently Family Dollar is planning on opening 300 new stores, 50% more than the previous year.
Flurry of Estimate Revisions
Over the past month Family Dollar has received 27 upward estimate revisions for this fiscal year. The Zacks Consensus Estimate for fiscal 2011 was up a penny into the earnings release and another 8 after, to $3.04.
Next year’s forecasts are up 11 cents on average, to $3.49. Currently the projected growth rates are 16% this year and another 15% in fiscal 2012.
While the stock does not offer quite as much value at Family Dollar’s stores do, the valuation picture is pretty good. Shares of FDO are going to about 14 times forward estimates and have a PEG ratio of 1.1. Both are in line with its peers, but Family Dollar’s P/S of 0.7 is ahead of the pack.
The Chart
Some may get leery of a stock that is up so far, so fast. However, if you take a look a the earnings trends you can see that the move is not only justified, but has plenty of room to continue.
Read the June 2nd Feature Here
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
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