Peltz's decision to slash his fund's stake by more than two thirds comes just days after the company's shareholders agreed to an $8.5 billion buyout offer from Dollar Tree (DLTR) - Get Dollar Tree, Inc. Report .
Trian Management, the company's second largest shareholder before the sale, sold about six million shares of Family Dollar for almost $456.5 million. Trian did not give a reason for the sale, Reuters added.
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Shares of Family Dollar are up 0.31% to $76.60 in late afternoon trading.
Separately, TheStreet Ratings team rates FAMILY DOLLAR STORES as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate FAMILY DOLLAR STORES (FDO) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FDO's revenue growth has slightly outpaced the industry average of 3.7%. Since the same quarter one year prior, revenues slightly increased by 2.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.45, 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 0.20 is very weak and demonstrates a lack of ability to pay short-term obligations.
- FAMILY DOLLAR STORES's earnings per share declined by 47.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, FAMILY DOLLAR STORES reported lower earnings of $2.49 versus $3.83 in the prior year. This year, the market expects an improvement in earnings ($2.74 versus $2.49).
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Multiline Retail industry and the overall market, FAMILY DOLLAR STORES's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- You can view the full analysis from the report here: FDO Ratings Report