Family Dollar Stores’s Underperform Rating Reaffirmed at Bank of America (FDO)
Family Dollar Stores (NYSE:FDO)‘s stock had its “underperform” rating restated by analysts at Bank of America in a research report issued to clients and investors on Tuesday. They currently have a $53.00 price target on the stock. Bank of America’s price objective suggests a potential downside of 22.76% from the company’s current price.
The analysts wrote, “Following the disclosure after market on Friday that Icahn has taken a 9.4% stake, resulting in press speculation that he may push for a combination with DG, we have conducted a preliminary analysis of potential synergies and estimate that DG could pay up to $80/share for FDO in a cash and debt-finance acquisition, which would be 1) accretive in 2015 and 2) keep DG’s leverage to within 3.5x excluding merger synergies and 2.8x including synergies, preserving its investment grade rating. “We note that DG has not commented on a potential transaction and we are not suggesting interest on their part. While we believe shareholders of both companies could be favorable toward a potential combination at the right price, the main uncertainty in our minds is whether or not DG’s management would be willing to undertake such a transaction, given the execution risks involved. In fact, we have never seen a listed retailer within 11,000 stores purchase a troubled retailer with over 8,000 stores. “DG’s shareholder base is also much more fragmented than that of FDO. We note that FDO has just issued a one-year shareholder rights plan which caps ownership of all shareholders to 10% (without paying a control premium for all shares), increasing the uncertainties surrounding the situation.”
Family Dollar Stores (NYSE:FDO) opened at 68.62 on Tuesday. Family Dollar Stores has a one year low of $55.64 and a one year high of $75.29. The stock has a 50-day moving average of $58.13 and a 200-day moving average of $62.00. The company has a market cap of $7.811 billion and a P/E ratio of 17.79.
Family Dollar Stores (NYSE:FDO) last posted its quarterly earnings results on Thursday, April 10th. The company reported $0.80 EPS for the quarter, missing the Thomson Reuters consensus estimate of $0.90 by $0.10. The company had revenue of $2.70 billion for the quarter, compared to the consensus estimate of $2.77 billion. During the same quarter in the prior year, the company posted $1.21 earnings per share. The company’s quarterly revenue was down 6.1% on a year-over-year basis. Analysts expect that Family Dollar Stores will post $3.15 EPS for the current fiscal year.
The company also recently declared a quarterly dividend, which is scheduled for Tuesday, July 15th. Shareholders of record on Friday, June 13th will be given a dividend of $0.31 per share. This represents a $1.24 dividend on an annualized basis and a yield of 1.81%. The ex-dividend date is Wednesday, June 11th.
A number of other analysts have also recently weighed in on FDO. Analysts at S&P Equity Research downgraded shares of Family Dollar Stores to a “strong sell” rating in a research note on Monday. Separately, analysts at Gilford Securities upgraded shares of Family Dollar Stores from a “sell” rating to a “neutral” rating in a research note on Monday. Finally, analysts at Morgan Stanley downgraded shares of Family Dollar Stores from a “hold” rating to a “sell” rating in a research note on Monday. They now have a $79.00 price target on the stock, up previously from $60.53. Seven research analysts have rated the stock with a sell rating, fifteen have assigned a hold rating and three have issued a buy rating to the company. Family Dollar Stores currently has an average rating of “Hold” and a consensus price target of $61.10.
Family Dollar Stores, Inc (NYSE:FDO) operates a chain of more than 7,900 general merchandise retail discount stores in 46 states, providing consumers with a selection of merchandise in neighborhood stores.
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