FDO  Family Dollar Stores Inc.

Exchange

NYSE

Sector

Consumer Services

Industry

Department/Specialty Retail Stores

Market Cap.

9.09B

Vuru Grade

38.44/100

Current Price

$79.39
+0.00 (+0.00%)

Growth Price

$29.60
Overvalued by 62.72%

Stability Price

$27.79
Overvalued by 64.99%

Company Metrics

  • P/E 38.76
  • P/S 0.86
  • P/B 5.13
  • EPS 2.04
  • Cash ROIC -0.39%
  • Cash Ratio 0.19
  • Dividend 1.24 / N/A %
  • Avg. Vol. 1.15M
  • Shares 333.00M
  • Market Cap. 9.09B

Company Description

Family Dollar Stores, Inc. operates a chain of self-service retail discount stores primarily for low and middle income consumers in the United States. The company offers consumables, including household chemicals, paper products, candy and snack products, health and beauty aids, hardware and automotive supplies, and pet food products and supplies; and home products, which comprise domestics, house... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Crooks use pickup truck to break into Family Dollar store
KTRK-TV - Aug 29, 2016
A group of crooks used a stolen pickup truck as a battering ram to rob a Family Dollar store, surveillance video shows. KTRK.
Family Dollar Stores to pay $307000 for environmental violations
Sacramento Bee - Apr 23, 2016
Family Dollar Stores Inc. has been ordered by a San Joaquin County Superior Court judge to pay $307,000 in civil penalties, costs and supplemental environmental projects following an investigation into the firm's handling of hazardous waste.
Family Dollar Stores settles hazardous waste allegations - Davis Enterprise
Discount Retail Stores: The Family Dollar Deal Makes Dollar Tree An Excellent ...
Seeking Alpha - Apr 6, 2016
And, this is the case with Dollar Tree, Inc. (NASDAQ:DLTR), whose deal with Family Dollar (NYSE:FDO) came at a very high cost.
Kansas City Family Dollar Store closed due to mice infestation
KSHB - Nov 29, 2016
Marissa Ellise posted a picture she says she took at the Family Dollar store at 30th and Prospect in Kansas City on Sunday.
A year after Family Dollar deal, Dollar Tree hurt by lower store traffic
Charlotte Observer - Aug 25, 2016
“(Family Dollar) stores are cleaner, the values are greater and our merchandise assortments are improving. Additionally, we are taking the necessary steps to develop our shared services support model, and are continuing our focus” on cost savings, CEO ...
Dollar-Store Chains Tumble After Food-Stamp Cuts Hurt Sales - Bloomberg
Dollar Tree, Inc. Reports Results for the Second Quarter Fiscal 2016 - Business Wire (press release)
Dollar Tree taps former Wal-Mart executive to run Family Dollar
Virginian-Pilot - Jan 5, 2017
A man who once led merchandising for Wal-Mart Stores Inc. will lead the chain of Family Dollar stores. Chesapeake-based Dollar Tree Inc. has hired Duncan Mac Naughton to be president and chief operating officer of Family Dollar. The chain of discount ...
Dollar Tree, Inc. Announces Management Changes - Business Wire (press release)
Man threatens to shoot employee during Family Dollar store robbery, police say
Local 10 - Nov 15, 2016
MIAMI - Miami police are searching for a man they said robbed a Family Dollar store this month at gunpoint. The robbery was reported about 9:30 p.m.
8 men rob Family Dollar store in Crown Heights as worker tries to fight them off - WABC-TV
NYPD: 8 Men Rob Brooklyn Store, Assault Employee With Shopping Baskets - CBS Local
Family Dollar forks over cash for violations
Foothills Sun Gazette - May 4, 2016
... announced that on April 11, 2016, San Joaquin County Superior Court Judge Barbara A. Kronlund ordered North Carolina Corporation Family Dollar Stores, Inc. to pay a total of $307,000 in civil penalties, costs, and education for environmental ...
Man With Down Syndrome Sues Family Dollar After Being Forced to Leave Store
The Mighty - Sep 19, 2016
John F. Garcia, a 50-year-old man with Down syndrome, is suing Family Dollar Stores of Colorado after he and a group of developmentally disabled adults were repeatedly asked to leave the Pueblo, Colorado, branch of the discount retail chain.
Gunman shoots cashier at Family Dollar store on Detroit's east side
WXYZ - Jan 24, 2017
DETROIT (WXYZ) - A cashier at a Family Dollar store on Detroit's east side has been shot. The search for suspects is underway.
Cashier shot in the neck during east side Family Dollar robbery - Fox 2 Detroit
Family Dollar Employee Shot During Armed Robbery On Detroit's East Side - CBS Local
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for FDO to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate FDO's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$79.39 Current Price

$29.60 Growth Price (DCF)

Overvalued by 62.72%


Growth Rate Assumed by Market: 33.29%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$27.79 Stability Price (EPV)

Overvalued by 64.99%


Discount Rate: 15.0%

$68.53 Book Price

Overvalued by 13.68%


Very Poor Cash Return on Invested Capital over the past 5 years

FDO has failed to generate positive returns on its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

FDO has lost $0.39 of cash for every $100 invested.
Figures in USD. Fiscal year ends in January
20122013201420152016
Free Cash Flow -233.94M -272.46M 32.87M 1.64B 871.00M
divided by
Invested Capital 2.21B 2.48B 2.58B 13.68B 13.74B
Cash ROIC -10.59% -10.97% 1.27% 12.00% 6.34%

Excellent Return on Equity over the past 5 years

Over the past 5 years, FDO has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

FDO has generated $26.18 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in January
20122013201420152016
Net Income 422.24M 443.58M 284.50M 1.53B 1.07B
divided by
Stockholders' Equity 1.30B 1.60B 1.67B 5.38B 4.25B
Return on Equity 32.54% 27.74% 17.08% 28.37% 25.18%

Mediocre Business Performance over the past 6 years

FDO isn't a strong business and might be consistently attempting to fuel growth with debt or has trouble staying profitable. The lack of predictability in free cash flow should be concerning for the reliability of future earnings.

FDO has been unable to consistently create value for shareholders.
Figures in USD. Fiscal year ends in January
201120122013201420152016
Free Cash Flow 182.80M -233.94M -272.46M 32.87M 1.64B 871.00M

Weak Balance Sheet

FDO's financial position is not ideal. The key is to check whether FDO is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in January
201120122013201420152016
Cash 237.41M 98.60M 145.00M 148.64M 2.25B 1.11B
Current Assets 1.53B 1.77B 1.86B 2.10B 8.68B 7.65B
Total Assets 3.00B 3.37B 3.71B 3.86B 21.46B 20.58B
Current Liabilities 1.02B 1.07B 1.08B 1.13B 5.54B 5.73B
Total Liabilities 1.91B 2.08B 2.11B 2.19B 16.08B 16.33B
Stockholder' Equity 1.09B 1.30B 1.60B 1.67B 5.38B 4.25B
Current Ratio 1.51 1.66 1.72 1.86 1.57 1.34
TL-to-TA 0.64 0.62 0.57 0.57 0.75 0.79

Consistent Reinvestment of Profits over the past 6 years

FDO has consistently retained profits. This may put FDO in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, FDO can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in January
201120122013201420152016
Retained Earnings 1.97B 1.23B 1.57B 1.72B 7.34B 6.33B
Retained Earnings Growth - -37.33% 27.16% 9.84% 325.74% -13.71%

Highly Competitive Industry over the past 6 years

It's likely that FDO is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely FDO invests heavily in R&D and Sales, General & Administrative expenses.

Only $4.24 of every $100 of Revenue have been profit, on average over the past 6 years.
Figures in USD. Fiscal year ends in January
201120122013201420152016
Net Income 388.45M 422.24M 443.58M 284.50M 1.53B 1.07B
divided by
Revenue 8.55B 9.33B 10.39B 10.49B 28.11B 27.08B
Net Profit Margin 4.54% 4.53% 4.27% 2.71% 5.43% 3.95%

Satisfactory Pricing Power over the past 6 years

Consistency is vital. FDO has been able to maintain gross margins fairly consistently, which is a strong indication of their ability to raise prices with inflation. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$36.23 of every $100 worth of sales have been Gross Profit, on average over the past 6 years.
Figures in USD. Fiscal year ends in January
201120122013201420152016
Gross Profit 3.03B 3.26B 3.55B 3.53B 11.24B 10.58B
divided by
Revenue 8.55B 9.33B 10.39B 10.49B 28.11B 27.08B
Gross Margin 35.47% 34.94% 34.21% 33.67% 40.00% 39.08%

High Capital Intensity over the past 6 years

FDO spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

121.16% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in January
201120122013201420152016
Capital Expenditure 345.27M 603.31M 744.43M 436.29M 1.07B 1.11B
divided by
Net Income 388.45M 422.24M 443.58M 284.50M 1.53B 1.07B
Capital Expenditure Ratio 88.88% 142.88% 167.82% 153.35% 69.99% 104.02%

Good Dividend History over the past 6 years

FDO has distributed dividends for the past 6 years. Remember, the longer a company's dividend history, the more established the company might be and the more reliable the future of the dividend probably is.
Figures in USD. Fiscal year ends in January
201120122013201420152016
Dividend Paid 83.44M 91.39M 108.33M 130.09M 421.00M 456.00M
divided by
Shares Outstanding 124.49M 118.06M 115.81M 114.42M 361.70M 333.00M
Dividend Paid Per Share 0.67 0.77 0.94 1.14 1.16 1.37
Price at Year End 57.66 62.70 65.44 79.30 79.39 79.39
Dividend Yield 1.16% 1.23% 1.43% 1.43% 1.47% 1.72%

Strong History of Stock Buybacks over the past 6 years

FDO has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in January
201120122013201420152016
Shares Outstanding 124.49M 118.06M 115.81M 114.42M 361.70M 333.00M
Stock Bought Back - 5.44% 1.95% 1.21% -68.37% 8.62%
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