Q3 Preview: Fuel Costs in Spotlight for Family Dollar (FDO) Results
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Price: $79.39 --0%
Rating Summary:
0 Buy, 19 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 10 | New: 13
Rating Summary:
0 Buy, 19 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 10 | New: 13
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Family Dollar (NYSE: FDO) is trading higher Tuesday afternoon into its third-quarter earnings report, expected out before the market opens Wednesday.
The discount retailer is expected to report earnings of 95 cents per share on revenue of $2.17 billion. If achieved, earnings would suggest growth of 3.1 percent from last quarter and 23 percent from the third quarter in 2010.
Shares gained 11.6 percent through the quarter and are down 4.6 percent since.
Last quarter, Family Dollar guided to third-quarter earnings of 92 to 97 cents per share. Comps are also expected to be up five to seven percent, translating to comps of 5.4 to 5.5 percent. Last quarter, comps were up just 5.1 percent.
Looking at a competitor, Dollar General reported mixed quarterly results recently, missing on earnings. Comps increased 5.4 percent for "the General." Dollar Tree (Nasdaq: DLTR) topped on both accounts, with a 7.1 percent increase in comps.
In the quarter, investor Nelson Peltz and his Trian Group disclosed contacting Family Dollar CEO Howard Levine aiming to acquire the company for $55 to $60 per share.
Analysts on the stock are mostly neutral on the shares; data from Bloomberg has 5 with a Buy rating, 16 at Hold, and three suggesting to Sell. The price target average is $53.40, with a low of $39 and high of $67. Family Dollar has traded in a range of $35.31 to $56.92 over the last 52-weeks.
Analyst Commentary
Goldman Sachs is expecting EPS of 92 cents. "While sales are likely to accelerate from 2Q’s 5.1% slowdown, we expect the gross margin to come under pressure due to (1) higher fuel costs due to 33% yoy increases in diesel prices and (2) food inflation, which we believe is not fully being passed on to FDO’s cash-strapped customer." Goldman is looking for comps of 6 percent.
Deutsche Bank expects earnings of 96 cents and comps of 5 percent. Deutsche expects a 15 basis point increase in gross margins, stating "with system improvements offsetting higher gas prices, mix shifts and inflationary pressures. This forecast is lower than the 23 bps gross margin gain FDO posted in the 2nd quarter. Including SG&A increases from initiatives, we look for 45 bps of operating margin expansion."
Wedbush sees earnings of 95 cents and comps of 6 percent. Wedbush said "there is $350 million remaining on the $750 million September 2010 share repurchase authorization, which the company expects to complete by the fall of 2011."
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.
The discount retailer is expected to report earnings of 95 cents per share on revenue of $2.17 billion. If achieved, earnings would suggest growth of 3.1 percent from last quarter and 23 percent from the third quarter in 2010.
Shares gained 11.6 percent through the quarter and are down 4.6 percent since.
Last quarter, Family Dollar guided to third-quarter earnings of 92 to 97 cents per share. Comps are also expected to be up five to seven percent, translating to comps of 5.4 to 5.5 percent. Last quarter, comps were up just 5.1 percent.
Looking at a competitor, Dollar General reported mixed quarterly results recently, missing on earnings. Comps increased 5.4 percent for "the General." Dollar Tree (Nasdaq: DLTR) topped on both accounts, with a 7.1 percent increase in comps.
In the quarter, investor Nelson Peltz and his Trian Group disclosed contacting Family Dollar CEO Howard Levine aiming to acquire the company for $55 to $60 per share.
Analysts on the stock are mostly neutral on the shares; data from Bloomberg has 5 with a Buy rating, 16 at Hold, and three suggesting to Sell. The price target average is $53.40, with a low of $39 and high of $67. Family Dollar has traded in a range of $35.31 to $56.92 over the last 52-weeks.
Analyst Commentary
Goldman Sachs is expecting EPS of 92 cents. "While sales are likely to accelerate from 2Q’s 5.1% slowdown, we expect the gross margin to come under pressure due to (1) higher fuel costs due to 33% yoy increases in diesel prices and (2) food inflation, which we believe is not fully being passed on to FDO’s cash-strapped customer." Goldman is looking for comps of 6 percent.
Deutsche Bank expects earnings of 96 cents and comps of 5 percent. Deutsche expects a 15 basis point increase in gross margins, stating "with system improvements offsetting higher gas prices, mix shifts and inflationary pressures. This forecast is lower than the 23 bps gross margin gain FDO posted in the 2nd quarter. Including SG&A increases from initiatives, we look for 45 bps of operating margin expansion."
Wedbush sees earnings of 95 cents and comps of 6 percent. Wedbush said "there is $350 million remaining on the $750 million September 2010 share repurchase authorization, which the company expects to complete by the fall of 2011."
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of the release.
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