Will Family Dollar (FDO) Miss Earnings? - Analyst Blog

Family Dollar Stores Inc. FDO, the operator of self-service retail discount store chains, is slated to report its second-quarter fiscal 2014 results on Apr 10, 2014. In the last quarter, it posted a negative surprise of 1.5%. Let's see how things are shaping up for this announcement.

Factors this Past Quarter

Family Dollar delivered lower-than-expected first-quarter fiscal 2014 results. The quarterly earnings missed the Zacks Consensus Estimate by a penny and dropped 1.4% from the prior-year quarter. Comparable-store sales fell 2.8% with customer transactions and average consumer transaction value also declining.

Earnings Whispers?

Our proven model does not conclusively show that Family Dollar is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to happen. This is not the case here, as you will see below.

Negative Zacks ESP: ESP for Family Dollar is -2.20%. This is because the Most Accurate estimate stands at 89 cents, while the Zacks Consensus Estimate is pegged at 91 cents.

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

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements:

Wynn Resorts Ltd. (WYNN) has an Earnings ESP of +1.46% and a Zacks Rank #1 (Strong Buy).

WESCO International Inc. WCC has an Earnings ESP of +3.67% and a Zacks Rank #2 (Buy).

General Dynamics Corp. GD has an Earnings ESP of +1.23% and a Zacks Rank #2 (Buy).