The 10-second takeaway
For the quarter ended April 28 (Q1), Fred's met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved and GAAP earnings per share increased significantly.
Margins grew across the board.
Fred's tallied revenue of $500.5 million. The six analysts polled by S&P Capital IQ hoped for sales of $501.0 million on the same basis. GAAP reported sales were 3.3% higher than the prior-year quarter's $484.4 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.28. The nine earnings estimates compiled by S&P Capital IQ anticipated $0.27 per share. GAAP EPS of $0.28 for Q1 were 17% higher than the prior-year quarter's $0.24 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 29.5%, 100 basis points better than the prior-year quarter. Operating margin was 3.4%, 30 basis points better than the prior-year quarter. Net margin was 2.1%, 10 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $474.1 million. On the bottom line, the average EPS estimate is $0.16.
Next year's average estimate for revenue is $1.98 billion. The average EPS estimate is $0.99.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 88 members out of 109 rating the stock outperform, and 21 members rating it underperform. Among 32 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 24 give Fred's a green thumbs-up, and eight give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Fred's is hold, with an average price target of $14.67.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. 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.