Earnings Preview for Family Dollar

Family Dollar Stores FDO will be reporting its third-quarter fiscal 2011 results Wednesday, June 29, before the opening bell. While the sluggish economy no doubt has continued to benefit the nation's number two dollar-store chain, the company also faces stiff competition from larger rivals such as Walmart WMT. Analysts are looking for Family Dollar to report per-share earnings of $0.95, which is up from $0.77 per share in the same period of last year. They also expect to see revenues of $2.2 billion, an increase of 8.4% from a year ago. The consensus earnings estimate is unchanged over the past 90 days. Note that the earnings results have been better than expected in all but one of the past eight quarters. And analysts are looking for year-over-year growth of both earnings and revenues in the current quarter as well. The Company Charlotte, North Carolina-based Family Dollar operates a chain of self-service retail discount stores targeted primarily to low and middle income consumers in the United States. Consumables (food, health and beauty aids and household items) account for about two-thirds of its sales, but the stores also sell apparel, home decor and personal electronics. Family Dollar launched an alliance with a private brands marketing firm and also appointed a new vice president in charge of real estate development during the three months that ended in May. Performance The company has a dividend yield of 1.2% and a return on equity of 21.4%. The long-term earnings per share growth forecast is 14.5%. Note that analysts have a mean price target on the stock of $52.47 per share. That is not much higher than the $52.33 where shares ended Monday. Shares have traded mostly between $50 and $55 since mid February; the stock has underperformed competitors Dollar General DG and Dollar Tree DLTR during that time.