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Will Family Dollar's Earnings Beat Estimate? - Analyst Blog
7/8/2013 10:50:00 AM
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.
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
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