Market Overview

4 Companies The Unsuccessful Family Dollar Suitor Might Buy

Related FDO
UBS Initiates Coverage On Family Dollar Stores, Inc., Dollar General Corp. And Dollar Tree, Inc.
Benzinga's M&A Chatter for Wednesday September 10, 2014
Family Dollar Rejects Dollar General Proposal (Fox Business)

As Dollar Tree (NASDAQ: DLTR) and Dollar General (NYSE: DG) battle for Family Dollar (NYSE: FDO), only one will emerge successful.

According to S&P Capital IQ, all hope may not be lost for the unsuccessful suitor. Analyst Richard Peterson says there are four other targets that may make for a good acquisition.

Big Lots

“The largest by market value and revenue would be Big Lots,” Peterson writes. He points out that Big Lots (NYSE: BIG) trades under nine times TTM EBITDA and 4.8 percent of the company is owned by activists.

Fred’s

Fred’s (NASDAQ: FRED) owns discount stores and pharmacies in the southeastern United States. “Earlier this year the company reportedly contacted possible suitors,” writes Peterson.

Five Below

An acquisition of Five Below (NASDAQ: FIVE) would allow for some diversification of customer base and product. A concern some investors have is that cost synergies with Five Below may be lower than with a traditional dollar store.

99 Cents Only Stores

99 Cents has been private since Ares Capital acquired the company for $1.58 billion in 2011. The discount retailers has seen strong growth as net income has increased from $0.9 million to $9.6 million since 2011.

Latest Ratings for FDO

DateFirmActionFromTo
Sep 2014UBSInitiates Coverage onNeutral
Jul 2014Piper JaffrayUpgradesUnderweightNeutral
Jul 2014Deutsche BankMaintainsHold

View More Analyst Ratings for FDO
View the Latest Analyst Ratings

Posted-In: Richard Peterson S&P Capital IQAnalyst Color Analyst Ratings Trading Ideas

 

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