Family Dollar Stores (NYSE:FDO) will report first-quarter earnings next week with a conference call happening aftermarket Thursday, Jan. 9. The company competes with Dollar General (NYSE:DG) and Dollar Tree Stores (NASDAQ:DLTR), and the discount stores all benefited from wallets tightening during the recession.

But Wal-Mart's continued price lowering to remain competitive has slowed the sales growth for the discounters. And the segment that's driving Family Dollar's future is also eating into the margins.

Here's what to watch in Family Dollar's first-quarter report.  

Quarterly estimates -- and results -- to beat
Analysts estimate revenue of $2.5 billion-year-over-year growth of nearly 13% -- with earnings per share of $0.70. Family Dollar missed consensus revenue estimates last quarter but had met estimates for the prior four quarters. The store's EPS performance was more of a mixed bag, with two beats preceding two misses.

Investors and analysts will compare the first-quarter results to the prior year's period to check for signs of growth or losses. The first quarter of 2013 featured revenue of $2.4 billion and EPS of $0.69. Comparable-store sales had improved nearly 7%.

Watch the segment growths -- and the margins 
But gross profit as percent of sales was down 120 basis points that quarter due partly to low-margin consumables performing the strongest. Consumables accounted for nearly three-quarters of Family Dollar's total sales in last year's first quarter. And consumables and seasonal items were the only segments to show growth over the prior year.  

So it's important to watch the segment performances in this year's first-quarter release to see if the dependence on consumables is on the decline, which would help improve margins. 

Competitor comparison 
Dollar General reported third-quarter results early last month with revenue of $4.4 billion and EPS of $0.70. The company met or beat EPS estimates for the past five quarters and only missed revenue estimates for one quarter during that period.

Comps were up 4.4% and gross profit as a percentage of sales fell 61 basis points. Dollar General suffered the same problem as Family Dollar with the consumables strength taking a bite out of margins. Consumables accounted for 77% of Dollar General's overall sales in the third quarter, but the company did see minimal growth across all segments.

Analysts estimate Dollar General will report full-year revenue of nearly $18 billion with EPS of $3.22. The high end of the company's EPS forecast matches estimates. Dollar General also expects year-over-year revenue growth of about 10% and a 4% comps increase.

Dollar Tree has met revenue estimates for the past five quarters but missed on EPS for the past two quarters. The company reported third-quarter results in late November with revenue of $1.9 billion and EPS of $0.58. Comps were up about 3% and gross profit was relatively flat year over year, which suggests that the company isn't overly reliant on consumables. 

Corporate guidance for Dollar Tree's full year includes a revenue range of $7.86 billion to $7.92 billion and EPS of $2.72 to $2.78. Analyst estimates come in at the higher end for both metrics.

Foolish final thoughts
Check Family Dollar's earnings release against analyst estimates and last year's performance. But also focus on the segments to see whether the consumables segment remains such a large part of business while the other segments dwindle. 

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Fool contributor Brandy Betz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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