Previewing Earnings for, Inuit, Wal-Mart & Dollar Tree

Indie Research

Stocks tend to be most volatile around earnings season, when a good or bad report can make or break it. However, a good or even great earnings report doesn't necessarily translate into a huge pop for a stock.

During earnings season, publishes a comprehensive 20- to 30-page Earnings Preview report for the week ahead each Friday.

Over the past two years, used the data it has collected to correctly predict investor reactions for nearly two-third of the stocks it's previewed.

In its latest earnings preview, looks at several popular stocks still set to report this week, including Wal-Mart (WMT - News), Intuit (INTU - News), Dollar Tree (DLTR - News), and (CRM - News).

Here is just a tiny sample of what wrote about Dollar Tree:

Dollar Tree operates a chain of discount retail stores, which offer merchandise at the fixed price of $1.00. Its stores operate under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant and Dollar Bills. ...

Last quarter, the company reported a fourth-quarter profit of $187.9 million, or $1.60 a share, compared with $162.5 million, or $1.29 a share, a year earlier.

Revenue rose 13% to $1.95 billion on a 7.3% increase in same-store sales, which came on top of a 6.3% comp gain in the prior-year period.

Analysts had expected a profit of $1.58 a share on sales of $1.93 billion.

Dollar Tree opened 278 new stores in 2011 and relocated and expanded 91 others. Selling square footage increased 6.9%, and it ended the year with 4,351 stores. It plans to open approximately 315 new stores and 75 relocations or expansions in 2012.

Looking at the balance sheet and statement of cash flow, cash and investments at year-end total $288.3 million, versus $486 million at the end of fiscal 2010. It spent $300 million for share repurchases in Q4, buying back 3.5 million shares. For the full year, it invested $645.9 million for the share repurchase, and repurchased 8.7 million shares.

For the current quarter, Dollar Tree expects EPS of 91-97 cents a share on sales of $1.65-$1.69 billion. Analysts were expecting a profit of 98 cents a share on revenue of $1.70 billion. ...

Dollar Tree has beaten EPS estimates each quarter over the past two years. During that time, the stock has risen the next session four of eight quarters. Seasonally, the stock has risen each of the past four years. ...

Outside of earnings, there is a lot to like about Dollar Tree's performance, growth prospects, and business model. The $1 pricing limit can lead to more impulse purchases by its customers than at other retailers where even a few dollars can lead to a moment of pause. The fact the merchandise can vary a bit from store to store certainly hasn't hurt its sales growth, though it is a markedly different strategy than its competitors follow.

At current levels, its approximately 18x forward P/E represents a premium to the valuation of its primary competitors, Family Dollar (FDO - News) and Dollar General (DG - News). ...

The full earnings analysis includes a look at historical earnings data and EPS trends for the companies above and more; examines past investor reactions to earnings in various contexts; gives options activity analysis; reviews previous-quarter earnings; and gives an opinion on both what earnings will look like and how investors will react based on the aforementioned data points.

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