Merger Monday and the Middle Class (BIG, FRED, DG, DLTR)
During a Big Vacation Week the Economic News is Mixed…
“Value Hunters” will be looking at Big Lots, Inc. (NYSE:BIG), Fred's, Inc. (NASDAQ:FRED), Dollar General Corp. (NYSE:DG), and Dollar Tree, Inc. (NASDAQ:DLTR) today as the four discount retailers have dipped to more ‘affordable’ share valuations in the last week. This is a good week for considerations…
As the NASDAQ closes in on a 10-year high, thanks to Apple beating Samsung in court, and M&A activity booming today on ‘Merger Monday’ in everything from the car rental business to banks to semiconductors, some middle class discount retailers have recently taken it on the chin and with light trading and no big news other than the weather expected all week; investors are looking around…
A loss, or discount to a new buyer; depending on your perspective…
At Dollar Tree shares were trading at a 3-month high of $56.74 on June 19 and have drifted down to today’s price of $48.67; down 14.2%. The Company, with approximately 4,351 discount variety retail stores, missed Q2 analyst’s estimates recently and that added to the drag on the stock. I think DLTR actually had a strong quarter i.e. Earnings per diluted share for the second quarter were $0.51, an increase of 30.8% compared to the $0.39 earnings per diluted share reported for the quarter ended July 30, 2011.
Another “Main Street” ‘bargain’ is Dollar General which was trading at a 3-Month high of $55.60 on July 10 and has drifted down to today’s price of $48.80; down 12.2%. DG had 9,961 stores located in 39 states as of March 2, 2012. The Company will report Q2 numbers on Sept 5.
Big Lots, the “Small Box” food and general merchandise provider recently said its second-quarter net income tumbled 38% to miss expectations and BIG cut its profit forecast for the full year. In a 3-month glimpse, Big Lots spent most of the summer traveling along the $40 valuation; but the Q2 news pushed it off a cliff; shares are trading today in the $30.70 range: A big discount to new buyers.
At Fred's general merchandise stores and pharmacies, the nose-dive of share valuation was a similar picture. FRED’s had actually climbed to $15.80 by August 20, but the Company’s Q2 numbers last week missed estimates. Fred’s operates 679 Company-owned discount general merchandise stores and shares are trading today in the $13.47 range; down 14.74% in a week.
I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article.
Do NOT buy or sell FRED, DLTR, DG or BIG until you have read everything.
SmallCap Network provides comprehensive research and opinions on FRED, DLTR, DG and BIG. |
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| Date: | May 23, 2013 | |
| Price: | Free | |
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