Family Dollar Stores

Family Dollar Stores (FDO - Analyst Report) reported excellent first-quarter results in early January that sent its share price hurtling towards a key level of resistance at the $29 mark.

Company Description

Family Dollar, Inc. operates a chain of self-service retail discount stores for low to lower-middle income consumers in the United States. The company was founded in 1959 and has a market cap of $4.02 billion.

First-Quarter Results

Family Dollar is distinguishing itself in a tough economy by catering to budget sensitive consumers and growing its earnings. The company's first-quarter results, reported on Jan 7, were ahead of expectations.

Sales were up 4.2% from last year to $1.75 billion. Income increased to $59.3 million, up from $51.9 million last year, producing earnings of 42 cents per share, 2 cents ahead of estimates.

Consistent Earnings

Family Dollar has been riding a wave of consistent earnings production over the last year, having beat analyst estimates in each of the last four quarters.

Family Dollar provided some texture to its results, saying that its same-store sales, a key retail metric, were up 2.1% during the period on higher traffic and transaction values. The company also said its sales were strongest in its consumables category, driven by food purchases.

More recently, Family Dollar noted that its December same-store sales were up 6% on strong food and toy sales.

Analyst Estimates

After the solid quarterly results, analysts went ahead and raised their earnings guidance. The current-year estimate is up 7 cents in the last month to $1.75 per share, while the next-year estimate is up 6 cents to $1.86, a 6% earnings growth projection.

The Chart

Shares of FDO have been on a steady rally for the last 7 months after bottoming out just above $18 in late June. More recently, this stock continues to pressure a key level of resistance just above $29. Take a look below.

Read the full analyst report on FDO