Week in Preview: Walgreen, Family Dollar Post End-of-Season Earnings
bySep 26th 2010 2:15PM
One of the most prominent quarterly reports scheduled this week, as the period winds down, comes from Walgreen (WAG). Analysts surveyed by Thomson Reuters are looking for the drugstore chain operator to report Tuesday that its fiscal fourth-quarter earnings are about the same as a year ago, or 45 cents per share. Note, though, that Walgreen fell short of earnings expectations in the previous two quarters.
During the three months that ended in August, Deerfield, Ill.-based Walgreen launched a social responsibility website and boosted its dividend. Revenue for that period is expected to total $16.8 billion, which is a 7.3% increase from the same period of last year. And for the full-year, analysts forecast EPS of $2.12 (+4.7%) on revenue of $67.4 billion (+6.4%).
Walgreen has a long-term EPS growth forecast of 13.3%, which is better than that of rival CVS Caremark (CVS), as well as the industry average. Walgreen's forward price-earnings (PE) ratio of 12.7 is less than the industry average and its trailing PE ratio of 13.9. Walgreen keeps enough cash on hand to cover long-term debt, and net cash flow from operations surged in the previous period. The First Call recommendation has been to buy WAG for more than 90 days, and the mean price target is currently $35.63. The Motley Fool makes a case for buying the stock. The share price has bounced between $26 and $30 since June and ended last week at $30.36, well below the 52-week high of $40.69.
Family Dollar on the March
Family Dollar Stores (FDO) is expected to be one of the week's biggest earnings gainers. In the three months that ended in August, the nation's No. 2 dollar-store chain announced a partnership with Western Union (WU) and declared a quarterly dividend. The Charlotte, N.C.-based company is expected to post earnings of 51 cents per share, which is a 15.7% increase from a year ago. Fiscal fourth-quarter revenue is expected to have grown 8.0% to $1.9 billion, and the full-year forecast calls for of $2.58 per share (+19.8%) on revenue of $7.9 billion (+6.3%). Earnings results have met or topped consensus estimates in the past five quarters.
Family Dollar's long-term EPS growth forecast is 13.6%, and its forward PE ratio is 15, which is down from the trailing PE ratio of 17.3. Family Dollar has a return on equity of 21.4, and keeps enough cash on hand to cover long-term debt. The consensus recommendation remains to buy Family Dollar, though Barclays just maintained its overweight rating on the stock. Shares are up 55.9% year to date and trading near the 52-week high of $44.48.
A Jabil Circuit Revenue Surge?
Analysts are looking for St. Petersburg, Fla.-based Jabil Circuit (JBL) to post a profit of a 49 cents per share for a fiscal fourth quarter in which it predicted a record year in revenue and earnings, and also declared a quarterly dividend. That compares to EPS of just 16 cents a year ago. The electronics manufacturer's revenues for the three-month period that ended in August are expected to total $3.9 billion, or 38.8% more than a year ago, and the forecast is for full-year per-share earnings of $1.50 (+58%) and $13.4 billion in revenue (+15%). Jabil's earnings results have been better than expected in the past five quarters, beating estimates by as much as seven cents per share.
Jabil's long-term EPS growth forecast of13.5% is better than that of competitor Flextronics (FLEX). The forward PE ratio is a mere 6.8, much less than the sector average. Analysts on average recommend buying JBL, and their mean price target is $19.42. At least one analyst expects a post-earnings report rally. Shares have bounced back from a recent 52-week low of $10.17 and closed Friday at $13.57.
Elsewhere on the Economic Calendar
Keep an eye out for the Consumer Confidence Index on Tuesday, as well as the second-quarter GDP estimate, Chicago Purchasing Managers Index for September and initial jobless claims for last week on Thursday.
Friday is the start of the fourth quarter, and data scheduled to be released that day include the University of Michigan Consumer Sentiment Index for September, construction spending and personal income for August, new motor vehicle sales in September and the ISM Manufacturing Index for September.