Family Dollar Stores, Inc. (FDO) Q2 Earnings Preview: Put Down, But Guidance Up?

Family Dollar Stores, Inc. (NYSE:FDO) will host a conference call for investors and analysts at 10:00 a.m. EST on Thursday, April 10, 2014 to discuss financial results for the second quarter ended March 1, 2014. The Company will also discuss various business initiatives and expectations for fiscal 2014. After some prepared remarks by management, participants will have an opportunity to ask questions.

Wall Street anticipates that the discount retailer will earn $0.90 per share for the quarter, which is $0.31 less than last year's profit of $1.21 per share. iStock expects FDO  to hit Wall Street's consensus number. The iEstimate is $0.90, too.

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Sales, like earnings, are expected to dip, slipping 4.2% year-over-year (YoY). Family Dollar Stores' consensus revenue estimate for Q2 is $2.77 billion, lower than last year's $2.89 billion.

Family Dollar Stores operates a chain of self-service retail discount stores primarily for low- and middle-income consumers in the United States. As of April 2, 2014, it operated approximately 8,100 stores in 46 states.

Intriguingly, unusually large put volume moved its way through the options pits on Tuesday. Specifically, 10,816 April $62.50 put options traded. Some investor(s) is betting big (roughly $4,500,000) on FDO.  We get the sense that the trade is a hedge against an open position in the stock, which means whoever might be worried about the stock taking a hit. However, it just speculation on our part.

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The put player might have a point as FDO shares dropped eight of the last 13 quarterly checkups. The stock's price was chopped an average of -5.05% with a range of -0.03% to -11.54%.  For the most part, earnings misses and on-target results equaled bearish EPS price-sensitivity seven of the nine misses/on-target announcements.

On the flip side, the handful of green reactions in the last 13 quarters averaged a gain of 3.71% with a max run of 9.41% and minimum of 0.22%.

Wall Street gurus aren't so positive on the stock either.  The consensus estimate started the quarter at a buck twelve. Since, it's dropped to $0.90 with a half-dozen analysts lowering their estimates in the last 30 days.

While the put player and analysts are bearish, Google Trends for the keyword "Family Dollar" are mildly bullish in comparison. Search volume intensity (SVI) is flat YoY, which could mean sales and earnings come in slightly stronger than expected.  Also, SVI for the start of Q3 is up 17% and could be a major positive for forward guidance.

Overall: Family Dollar Stores, Inc. (NYSE:FDO) has a history of hugging Wall Street's consensus, like the iEstimate. Despite what looks like an options bet against FDO, Google Trends hint at a quarter that's got a chance to be a little better than expected, but not much. However, management's forward looking guidance could be positive, which could give the stock a boost; albeit, most likely a small one based on recent history.