By
Motley Fool Staff
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November 17, 2011
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Fred's (Nasdaq: FRED ) came in under analysts' estimates last quarter, but now has a chance to fix things this quarter. The company will unveil its latest earnings on Tuesday, Nov. 22. Fred's and subsidiaries are engaged in the sale of general merchandise through its retail discount stores and full-service pharmacies.
What analysts say:
- Buy, sell, or hold?: Analysts are bullish on Fred's, as four analysts rate it as a buy and only one analyst rates it as a sell. Analysts don't like Fred's as much as competitor Gordman Stores overall. While analysts still rate the stock a hold, they are a little more optimistic about it compared to three months ago.
- Revenue forecasts: On average, analysts predict $446.8 million in revenue this quarter. That would represent a rise of 2.7% from the year-ago quarter.
- Wall Street earnings expectations: The average analyst estimate is earnings of $0.22 per share. Estimates range from $0.21 to $0.22.
What our community says:
CAPS All-Stars are solidly backing the stock, with 77.8% granting it an outperform rating. The community at large agrees with the All-Stars, with 79.8% giving it a rating of outperform. Fools are gung-ho about Fred's, though the message boards have been quiet lately, with only 35 posts in the past 30 days. Despite the majority sentiment in favor of Fred's, the stock has a middling CAPS rating of three out of five stars.
Management:
Fred's profit has risen year over year by an average of 30.7% over the past five quarters. Revenue has now gone up for three straight quarters.
Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and
net margins over the past four quarters.
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Quarter
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Q2
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Q1
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Q4
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Q3
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Gross Margin
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28%
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28.5%
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27.7%
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29.8%
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Operating Margin
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1.8%
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3.1%
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2.8%
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2.7%
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Net Margin
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1.1%
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2%
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1.8%
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1.8%
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Earnings estimates provided by Zacks.
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