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 down 0.8%. By the end of trading, Family Dollar Stores fell 65 cents (-1.1%) to $57.01 on average volume. Throughout the day, 2.2 million shares of Family Dollar Stores exchanged hands as compared to its average daily volume of 1.9 million shares. The stock ranged in price between $56.73-$57.97 after having opened the day at $57.75 as compared to the previous trading day's close of $57.66. Other companies within the Services sector that declined today were: China Armco Metals ( CNAM), down 15.2%, DS Torm ( TRMD), down 14.7%, Hawaiian Holdings ( HA), down 13%, and Eagle Bulk Shipping ( EGLE), down 11.1%.
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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 $6.74 billion and is part of the retail industry. The company has a P/E ratio of 14.2, below the S&P 500 P/E ratio of 17.7. Shares are down 8.3% year to date as of the close of trading on Tuesday. Currently there are six analysts that rate Family Dollar Stores a buy, two analysts rate it a sell, and 13 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, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins.

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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