Family Dollar Stores Inc. (FDO), the operator of self-service retail discount store chains, is slated to report its first-quarter fiscal 2015 results on Jan 8. In the last quarter, it had posted a negative surprise of 5.2%. Let’s see how things are shaping up for this announcement.
Factors Influencing This Quarter
Family Dollar has been in troubled waters for some time now. Soft economic recovery and heightened competition from other big brick and mortar retailers as well as online giants have affected sales and profitability. Moreover, increase in the sale of low-margin consumables and soft sales of discretionary products are likely to keep margins muted in the quarter to be reported. Family Dollar may also focus upon Dollar Tree’s buyout offer.
Earnings Whispers?
Our proven model does not conclusively show that Family Dollar is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.
Zacks ESP: Family Dollar has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 60 cents.
Zacks Rank: Family Dollar has a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements:
PetSmart, Inc. (PETM) has an Earnings ESP of +0.73% and a Zacks Rank #1 (Strong Buy).
Pacific Sunwear of California Inc. (PSUN) has an Earnings ESP of +7.69% and a Zacks Rank #1.
L Brands, Inc. (LB) has an Earnings ESP of +1.72% and a Zacks Rank #2 (Buy).
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