Trade-Ideas: Family Dollar Stores (FDO) Is Today's Post-Market Leader Stock

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 post-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 $96.4 million.
  • FDO is up 3% today from today's close.

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More details on FDO:

Family Dollar Stores, Inc. operates a chain of general merchandise 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 32.0. Currently there is 1 analyst that rates Family Dollar Stores a buy, 2 analysts rate it a sell, and 13 rate it a hold.

The average volume for Family Dollar Stores has been 1.1 million shares per day over the past 30 days. Family Dollar Stores has a market cap of $9.1 billion and is part of the services sector and retail industry. The stock has a beta of 0.02 and a short float of 4.7% with 4.01 days to cover. Shares are up 22.5% year-to-date as of the close of trading on Wednesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year 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 ratings report include:
  • FDO's revenue growth has slightly outpaced the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 4.5%. 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.
  • Net operating cash flow has increased to $216.16 million or 47.42% when compared to the same quarter last year. In addition, FAMILY DOLLAR STORES has also vastly surpassed the industry average cash flow growth rate of -15.92%.
  • The current debt-to-equity ratio, 0.30, 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 0.26 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • FAMILY DOLLAR STORES has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 ($3.17 versus $2.49).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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