FDO  Family Dollar Stores Inc.

Exchange

NYSE

Sector

Consumer Services

Industry

Department/Specialty Retail Stores

Market Cap.

9.09B

Vuru Grade

38.76/100

Current Price

$79.39
+0.00 (+0.00%)

Growth Price

$32.32
Overvalued by 59.29%

Stability Price

$33.33
Overvalued by 58.02%

Company Metrics

  • P/E 38.76
  • P/S 0.86
  • P/B 5.13
  • EPS 2.04
  • Cash ROIC 3.11%
  • Cash Ratio 0.23
  • Dividend 1.24 / N/A %
  • Avg. Vol. 1.15M
  • Shares 310.80M
  • 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

Dollar store closings leave neighborhood residents with one less option for ...
Rochester Democrat and Chronicle - Aug 27, 2017
Although the four stores closing displayed Family Dollar signage, it's been two years since they were under the ownership of Family Dollar Inc. In July 2014, Dollar Tree announced a merger with Family Dollar Stores Inc., but before the merger could be ...
Analyst Puts Dollar Tree's Family Dollar Stores On Amazon Radar
Benzinga - Jun 22, 2017
Amazon's planned acquisition of Whole Foods Market, Inc. (NASDAQ: WFM) has created a cottage industry in predicting where the retail giant will strike next.
Family Dollar hosts grand opening for Franklin store
The Preston Citizen - Jul 5, 2017
Family Dollar Stores, Inc., a leading small format and convenience retailer, has announced plans for a new store in Franklin.
Family Dollar Sues Spinoff Stores Over Unpaid Invoices
Law360 (subscription) - Apr 6, 2017
Law360, Wilmington (April 6, 2017, 7:09 PM EDT) -- Value retail chain Family Dollar Stores Inc. filed suit Thursday in Delaware state court alleging that Dollar Express LLC has failed to pay for $6.8 million in products delivered in recent days by ...
20 Family Dollar stores in Michigan will be closed - MLive.com
Family Dollar closing 6 Wisconsin stores this summer - Milwaukee Business Journal
Family Dollar legal fight spurs new $50 million lawsuit
The State - Jun 10, 2017
Private equity group Sycamore Partners started the Dollar Express chain when it bought roughly 330 stores from Matthews-based Family Dollar in 2015. Dollar Tree was required to sell the Family Dollar-branded stores for antitrust reasons in order to buy ...
Dollar Store Dispute Affects 130 Workers in NJ Amid Lawsuits - New Brunswick Today
Michael A. Witynski Becomes Dollar Tree President/COO - Progressive Grocer
Family Dollar announces renovated store grand opening
Star Local Media - Jun 21, 2017
Family Dollar Stores, Inc., a leading small format and convenience retailer, has announced plans for a renovated store opening in Mesquite.
Family Dollar reopens; extensive renovations complete
The West Volusia Beacon - Jul 19, 2017
“Family Dollar stores are open seven days a week and offer everyday items for the entire family in an easy-to-shop neighborhood location,” she said.
FTC allows Sycamore to sell Family Dollar stores to Dollar General
Reuters - Apr 27, 2017
Dollar Tree had announced the deal to buy Family Dollar in July 2014, saying it would help it fend off growing competition from Wal-Mart Stores Inc (WMT.N) and No.1 U.S. discounter Dollar General. “It's a lesson for the FTC about the kinds of ...
Family Dollar reopens after renovations
WatertownDailyTimes.com - Aug 13, 2017
ALEXANDRIA BAY - Family Dollar Stores Inc. will reopen its Church Street store Thursday now that the company has completed its renovations for the store.
Family Dollar Stores (FDO) Earning Somewhat Positive News Coverage, Analysis Finds - Sports Perspectives
Somewhat Favorable News Coverage Somewhat Unlikely to Affect Family Dollar ... - StockNewsTimes
Private brands getting refresh at Family Dollar
Supermarket News - May 25, 2017
New store layouts and new private brands are on their way to Family Dollar stores this year as parent company Dollar Tree Inc. continues an effort to regain sales momentum at the acquired discount chain. Comparable-store sales at Family Dollar declined ...
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

$32.32 Growth Price (DCF)

Overvalued by 59.29%


Growth Rate Assumed by Market: 30.78%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$33.33 Stability Price (EPV)

Overvalued by 58.02%


Discount Rate: 15.0%

$73.71 Book Price

Overvalued by 7.15%


Poor Cash Return on Invested Capital over the past 5 years

FDO has been unable to consistently generate sufficient returns from 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 only created $3.11 of cash for every $100 invested.
Figures in USD. Fiscal year ends in January
20132014201520162017
Free Cash Flow -272.46M 32.87M 1.64B 871.00M 889.00M
divided by
Invested Capital 2.48B 2.58B 13.68B 13.74B 12.91B
Cash ROIC -10.97% 1.27% 12.00% 6.34% 6.89%

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 $22.50 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in January
20132014201520162017
Net Income 443.58M 284.50M 1.53B 1.07B 611.00M
divided by
Stockholders' Equity 1.60B 1.67B 5.38B 4.25B 4.32B
Return on Equity 27.74% 17.08% 28.37% 25.18% 14.13%

Good Business Performance over the past 7 years

It's likely FDO has been unable to maintain profitability in tough economic times, making it a somewhat cyclical business. The other possibility is FDO has expended significant capital on items such as property, plant and equipment in specific years. Look for correlations.

FDO has created positive free cash flow for 7 or 8 of the past 10 years.
Figures in USD. Fiscal year ends in January
2011201220132014201520162017
Free Cash Flow 182.80M -233.94M -272.46M 32.87M 1.64B 871.00M 889.00M

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
2011201220132014201520162017
Cash 237.41M 98.60M 145.00M 148.64M 2.25B 1.11B 1.30B
Current Assets 1.53B 1.77B 1.86B 2.10B 8.68B 7.65B 7.63B
Total Assets 3.00B 3.37B 3.71B 3.86B 21.46B 20.58B 19.85B
Current Liabilities 1.02B 1.07B 1.08B 1.13B 5.54B 5.73B 5.65B
Total Liabilities 1.91B 2.08B 2.11B 2.19B 16.08B 16.33B 15.53B
Stockholder' Equity 1.09B 1.30B 1.60B 1.67B 5.38B 4.25B 4.32B
Current Ratio 1.51 1.66 1.72 1.86 1.57 1.34 1.35
TL-to-TA 0.64 0.62 0.57 0.57 0.75 0.79 0.78

Consistent Reinvestment of Profits over the past 7 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
2011201220132014201520162017
Retained Earnings 1.97B 1.23B 1.57B 1.72B 7.34B 6.33B 6.09B
Retained Earnings Growth - -37.33% 27.16% 9.84% 325.74% -13.71% -3.88%

Highly Competitive Industry over the past 7 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 $3.97 of every $100 of Revenue have been profit, on average over the past 7 years.
Figures in USD. Fiscal year ends in January
2011201220132014201520162017
Net Income 388.45M 422.24M 443.58M 284.50M 1.53B 1.07B 611.00M
divided by
Revenue 8.55B 9.33B 10.39B 10.49B 28.11B 27.08B 25.78B
Net Profit Margin 4.54% 4.53% 4.27% 2.71% 5.43% 3.95% 2.37%

Satisfactory Pricing Power over the past 7 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.

$36.68 of every $100 worth of sales have been Gross Profit, on average over the past 7 years.
Figures in USD. Fiscal year ends in January
2011201220132014201520162017
Gross Profit 3.03B 3.26B 3.55B 3.53B 11.24B 10.58B 10.16B
divided by
Revenue 8.55B 9.33B 10.39B 10.49B 28.11B 27.08B 25.78B
Gross Margin 35.47% 34.94% 34.21% 33.67% 40.00% 39.08% 39.40%

High Capital Intensity over the past 7 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.

125.17% 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
2011201220132014201520162017
Capital Expenditure 345.27M 603.31M 744.43M 436.29M 1.07B 1.11B 912.00M
divided by
Net Income 388.45M 422.24M 443.58M 284.50M 1.53B 1.07B 611.00M
Capital Expenditure Ratio 88.88% 142.88% 167.82% 153.35% 69.99% 104.02% 149.26%

Strong Dividend History over the past 7 years

FDO has consistently distributed a dividend for the past 7 years. This suggests FDO is established and will likely continue to distribute its dividend for the foreseeable future.
Figures in USD. Fiscal year ends in January
2011201220132014201520162017
Dividend Paid 83.44M 91.39M 108.33M 130.09M 421.00M 456.00M 459.00M
divided by
Shares Outstanding 124.49M 118.06M 115.81M 114.42M 361.70M 333.00M 310.80M
Dividend Paid Per Share 0.67 0.77 0.94 1.14 1.16 1.37 1.48
Price at Year End 57.66 62.70 65.44 79.30 79.39 79.39 79.39
Dividend Yield 1.16% 1.23% 1.43% 1.43% 1.47% 1.72% 1.86%

Strong History of Stock Buybacks over the past 7 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
2011201220132014201520162017
Shares Outstanding 124.49M 118.06M 115.81M 114.42M 361.70M 333.00M 310.80M
Stock Bought Back - 5.44% 1.95% 1.21% -68.37% 8.62% 7.14%
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