Hold on there, 99 Cents Only (NYSE:NDN) investors: Your favorite discount dollar store is finally set to catch up with filing its financial reports. Over the past two months, it has been releasing its quarterly and annual reports from prior periods, and although late with the current filing, should have it completed by the end of the month.
Not that you'll necessarily like what you read. The preliminary quarterly numbers are still lousy (they're slightly better than last year, but still reporting a loss) and the annual numbers are worse, although they are at least in the black.
The less-than-a-dollar store said it will report a one penny per-share loss for the fourth quarter -- compared with two pennies last year -- though that's still not good enough to meet the $0.02 per-share profit that analysts projected. It will also post a $0.14 per-share profit for the year, below both analyst forecasts of $0.18 and year-ago results of $0.16 per share.
It's a marked contrast to some of 99 Cents' rivals in the dollar store industry. Where the discount chain will announce quarterly sales and comps growth of 9% and 3%, respectively, Dollar Tree (NASDAQ:DLTR) was recording 13% sales growth on a nearly 6% rise in same-store sales. Family Dollar (NYSE:FDO), although facing anemic comps improvement, saw sales rise 12% from a year ago.
But the picture's not as glum as it seems. The discount store has been in turnaround mode for a while, and it's just taking a little longer than everyone apparently expected. It's showing meager improvement now sequentially for two quarters in a row. Comps, though lower than the competition, have actually been on the rise for seven straight quarters. Expenses are declining as a percentage of sales, shrink is being brought under control, and inventory issues may have finally been resolved.
Even more curious than the fact that 99 Cents Only has a bridal registry is that investors have been enjoying a near 30% rise in their shares' values over the past year as business basics have improved. What should we expect in the near future?
Well, it does trade at about half the book value ratios of Dollar Tree, Family Dollar, Big Lots (NYSE:BIG) and even Dollar General (NYSE:DG), which typically has a premium on every metric due to the high price being paid for its assets. But it still sports a commanding premium on operating earnings.
Even facing competition from the likes of typical category killers like Target (NYSE:TGT) and Wal-Mart (NYSE:WMT), the buck-an-item stores continue to flourish. If the traction 99 Cents Only has gained holds on, it could be a powerful profit maker for investors as its valuation expands to match its industry.
The trouble is, you couldn't be certain until just recently that the improvements witnessed were real. With its financial statements finally in order, the lousy numbers that have been gracing its pages may actually begin to shine a little more brightly.
For more on the discount dealers, check out:
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Family Dollar is a former Motley Fool Stock Advisor selection.
Fool contributor Rich Duprey owns shares of Wal-Mart but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.
