Financial Contrast: Fred’s (FRED) versus Its Rivals

Fred’s (NASDAQ: FRED) is one of 12 public companies in the “Variety stores” industry, but how does it contrast to its competitors? We will compare Fred’s to related businesses based on the strength of its profitability, dividends, risk, earnings, institutional ownership, analyst recommendations and valuation.

Risk & Volatility

How to Become a New Pot Stock Millionaire

Fred’s has a beta of 1.57, indicating that its share price is 57% more volatile than the S&P 500. Comparatively, Fred’s’ competitors have a beta of 0.89, indicating that their average share price is 11% less volatile than the S&P 500.

Institutional & Insider Ownership

76.5% of shares of all “Variety stores” companies are held by institutional investors. 6.9% of Fred’s shares are held by insiders. Comparatively, 13.8% of shares of all “Variety stores” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Fred’s and its competitors, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fred’s 0 2 0 0 2.00
Fred’s Competitors 164 1265 1701 90 2.53

Fred’s currently has a consensus price target of $6.00, indicating a potential upside of 91.69%. As a group, “Variety stores” companies have a potential upside of 1.77%. Given Fred’s’ higher probable upside, equities analysts clearly believe Fred’s is more favorable than its competitors.

Profitability

This table compares Fred’s and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fred’s -6.80% -9.94% -4.10%
Fred’s Competitors 3.76% 15.00% 6.64%

Dividends

Fred’s pays an annual dividend of $0.12 per share and has a dividend yield of 3.9%. Fred’s pays out -23.1% of its earnings in the form of a dividend. As a group, “Variety stores” companies pay a dividend yield of 1.6% and pay out 36.6% of their earnings in the form of a dividend. Fred’s is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Fred’s and its competitors revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Fred’s $2.13 billion -$66.53 million -5.94
Fred’s Competitors $65.63 billion $1.74 billion 22.25

Fred’s’ competitors have higher revenue and earnings than Fred’s. Fred’s is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Summary

Fred’s competitors beat Fred’s on 11 of the 15 factors compared.

About Fred’s

Fred's, Inc., together with its subsidiaries, sells general merchandise through its retail discount stores and full service pharmacies. The company, through its stores, offers household cleaning supplies, health products, beauty and personal care products, disposable diapers, pet foods, paper products, various food and beverage products, and pharmaceuticals to low, middle, and fixed income families in small- to medium- sized towns. It also sells general merchandise to franchised Fred's stores. As of January 28, 2017, the company operated 628 retail stores, including 55 express stores and 3 specialty pharmacy-only locations; 362 pharmacies; 3 specialty pharmacy facilities; and 16 franchised stores in 15 states of the southeastern United States. Fred's, Inc. was founded in 1947 and is headquartered in Memphis, Tennessee.

Receive News & Ratings for Fred's Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Fred's and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply