Sneak Peek: Family Dollar (FDO) Q3 Earnings Report

Earnings Estimates (High/Mean/Low): $0.80/$0.764/$0.74

Matthews, North Carolina based Family Dollar Stores Inc. (NYSE: FDO), which opened its first store in Charlotte, NC in 1959, currently operates 6,700 stores across 44 states.

FDO is expected to release its fiscal Q3 earnings report on Wednesday July 7th before the opening.  Management will be hosting a conference call at 10:00 am.

FDO has met or beat estimates in 10 of the past 11 Q’s and the past 4 in a row.  The company earned $0.81 last Q and $0.62 in Q3 last year.

After hitting a low of $14.62 in January ’08, FDO rallied up to $35 in April ’09 as investors allocated significant capital into discount retailers that could increase earnings power in a challenged US economic environment.  As ’09 progressed and the broad market enjoyed one of its most powerful rallies ever, shares of FDO were largely flat, finishing up the year at around $28.

The re-emergence of worry in ’10 has boosted shares yet again, allowing FDO to push through resistance at about $35 in early March.  Shares went on to hit highs of $42.07 in late May and now sit comfortably at $38.62.

It wouldn’t be surprising to see shares re-test prior resistance at $35 before embarking on another move to the upside, but its propensity to do so will depend largely on whether the market can strengthen in the coming weeks and months.  As demonstrated last year, FDO is unlikely to thrive in a generally strong market climate, but if you’re looking for some exposure to a company that can rise on a falling tape, FDO is a solid name to be involved in.

Disclosure: No holdings in FDO.

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