Will Family Dollar's Earnings Beat Estimate? - Analyst Blog

By
A A A

Family Dollar Stores Inc. ( FDO ), an S&P 500 company, is slated to report its third-quarter fiscal 2013 results on Jul 10. In the last quarter, it posted a negative surprise of 0.8%. Let's see how things are shaping up for this announcement.

Growth Factors this Past Quarter

The unexpected delay in tax refunds of 2012 adversely impacted sales at the end of January and at the beginning of February, resulting in lower-than-expected second-quarter fiscal 2013 results. The increase in sales of lower margin merchandises facilitated the contraction in gross margin. Further, management hinted that discretionary sales would remain under pressure.

Earnings Whispers?

Our proven model does not conclusively show that Family Dollar is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method ) 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: ESP for Family Dollar is -2.91%. This is because the Most Accurate Estimate stands at $1.00, while the Zacks Consensus Estimate is pegged at $1.03.

Zacks Rank #4 (Sell): Family Dollar's Zacks Rank #4 (Sell) lowers the predictive power of ESP because the Zacks Rank #4 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

ManpowerGroup Inc. ( MAN ), Earnings ESP of +3.33% and a Zacks Rank #1 (Strong Buy).

Deckers Outdoor Corp. ( DECK ), Earnings ESP of +13.21% and a Zacks Rank #2 (Buy).

Rent-A-Center, Inc. ( RCII ), Earnings ESP of +1.33% and a Zacks Rank #3 (Hold).



DECKERS OUTDOOR (DECK): Free Stock Analysis Report

FAMILY DOLLAR (FDO): Free Stock Analysis Report

MANPOWER INC WI (MAN): Free Stock Analysis Report

RENT-A-CENTER (RCII): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: DECK , FDO , MAN , RCII

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

112,131,130
  • $74.98 ▲ 5.18%
57,963,905
  • $8.32 ▲ 8.33%
48,392,602
  • $3.45 ▼ 0.29%
45,276,527
  • $36.17 ▲ 4.21%
44,800,927
  • $17.84 ▲ 0.34%
44,539,649
  • $97.03 ▼ 0.16%
44,078,180
  • $15.62 ▲ 0.64%
43,461,551
  • $35.50 ▼ 1.06%
As of 7/24/2014, 04:04 PM