Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- FDO's revenue growth has slightly outpaced the industry average of 12.3%. Since the same quarter one year prior, revenues rose by 17.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- FAMILY DOLLAR STORES has improved earnings per share by 5.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FAMILY DOLLAR STORES increased its bottom line by earning $3.58 versus $3.13 in the prior year. This year, the market expects an improvement in earnings ($3.78 versus $3.58).
- The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.17 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Multiline Retail industry and the overall market, FAMILY DOLLAR STORES's return on equity significantly exceeds that of both the industry average and the S&P 500.
Family Dollar Stores, Inc. operates a chain of self-service retail discount stores primarily for low- and middle-income consumers in the United States. Family Dollar Stores has a market cap of $7.4 billion and is part of the services sector and retail industry. The company has a P/E ratio of 17.00, below the S&P 500 P/E ratio of 18.00. Shares are up 1% year to date as of the close of trading on Thursday.
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--Written by a member of TheStreet Ratings Staff.
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