Family Dollar Stores Inc. (FDO): Today's Featured Services Laggard

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.

Family Dollar Stores ( FDO) pushed the Services sector lower today making it today's featured Services laggard. The sector as a whole closed the day up 0.6%. By the end of trading, Family Dollar Stores fell $2.29 (-3.3%) to $66.23 on heavy volume. Throughout the day, 4.8 million shares of Family Dollar Stores exchanged hands as compared to its average daily volume of 1.4 million shares. The stock ranged in price between $64.25-$68.75 after having opened the day at $68.53 as compared to the previous trading day's close of $68.52. Other companies within the Services sector that declined today were: Apollo Group ( APOL), down 22.1%, Scientific Learning Corporation ( SCIL), down 12.9%, Overseas Shipholding Group ( OSG), down 9.6%, and China Jo-Jo Drugstores ( CJJD), down 9.5%.
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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 $7.78 billion and is part of the retail industry. The company has a P/E ratio of 18.3, below the average retail industry P/E ratio of 18.6 and above the S&P 500 P/E ratio of 17.7. Shares are up 18.8% year to date as of the close of trading on Tuesday. Currently there are eight analysts that rate Family Dollar Stores a buy, two analysts rate it a sell, and 10 rate it a hold.

TheStreet Ratings rates Family Dollar Stores as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

On the positive front, China Yida ( CNYD), up 31.7%, United Rentals ( URI), up 15.5%, Innovaro ( INV), up 13.6%, and Envoy Capital Group ( ECGI), up 12.5%, were all gainers within the services sector with CBS Corporation ( CBS) being today's featured services sector leader.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the services sector could consider iShares Dow Jones US Cons Services ( IYC) while those bearish on the services sector could consider ProShares Ultra Short Consumer Sers ( SCC).

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