Family Dollar Stores (FDO) Leads The Pack In Pre-Market Activity

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Family Dollar Stores ( FDO) as a pre-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Family Dollar Stores as such a stock due to the following factors:

  • FDO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $198.2 million.
  • FDO traded 251,787 shares today in the pre-market hours as of 7:25 AM.
  • FDO is up 5% today from yesterday's close.

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More details on FDO:

Family Dollar Stores, Inc. operates a chain of self-service retail discount stores primarily for low- and middle-income consumers in the United States. The stock currently has a dividend yield of 1.6%. FDO has a PE ratio of 24.9. Currently there is 1 analyst that rates Family Dollar Stores a buy, 3 analysts rate it a sell, and 12 rate it a hold.

The average volume for Family Dollar Stores has been 2.8 million shares per day over the past 30 days. Family Dollar Stores has a market cap of $8.7 billion and is part of the services sector and retail industry. The stock has a beta of 0.38 and a short float of 6.4% with 2.60 days to cover. Shares are up 17.3% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Family Dollar Stores as a buy. 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, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • FDO's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 3.3%. 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, 0.47, 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.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Multiline Retail industry and the overall market, FAMILY DOLLAR STORES's return on equity exceeds that of both the industry average and the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
  • FAMILY DOLLAR STORES's earnings per share declined by 32.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, FAMILY DOLLAR STORES increased its bottom line by earning $3.83 versus $3.58 in the prior year. For the next year, the market is expecting a contraction of 19.3% in earnings ($3.09 versus $3.83).

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