Fred's (FRED) Stock Price Down 18.7% Following Weak Earnings

Shares of Fred's, Inc. (NASDAQ:FRED) dropped 18.7% during mid-day trading on Thursday following a dissappointing earnings announcement. The company traded as low as $3.80 and last traded at $4.14. Approximately 5,551,500 shares changed hands during trading, an increase of 360% from the average daily volume of 1,205,552 shares. The stock had previously closed at $5.09.

The company reported ($0.42) earnings per share for the quarter, missing the Zacks’ consensus estimate of ($0.13) by ($0.29). The business had revenue of $493.60 million during the quarter, compared to analysts’ expectations of $499.77 million. Fred's had a negative return on equity of 4.02% and a negative net margin of 6.08%. Fred's’s revenue for the quarter was down 4.5% compared to the same quarter last year. During the same quarter last year, the company posted ($0.27) EPS.

Fred's announced that its Board of Directors has authorized a share buyback program on Wednesday, December 6th that allows the company to repurchase 3,800,000 outstanding shares. This repurchase authorization allows the company to buy shares of its stock through open market purchases. Stock repurchase programs are typically an indication that the company’s board believes its shares are undervalued.

FRED has been the topic of a number of recent research reports. Zacks Investment Research upgraded shares of Fred's from a “sell” rating to a “hold” rating in a report on Friday, August 25th. Loop Capital started coverage on shares of Fred's in a research note on Thursday, August 24th. They issued a “hold” rating and a $6.00 target price on the stock. Two investment analysts have rated the stock with a sell rating, four have given a hold rating and one has given a buy rating to the stock. The stock has an average rating of “Hold” and an average price target of $13.00.

Several hedge funds and other institutional investors have recently modified their holdings of FRED. Commonwealth of Pennsylvania Public School Empls Retrmt SYS bought a new position in shares of Fred's in the second quarter worth approximately $11,058,000. FrontFour Capital Group LLC bought a new position in Fred's during the third quarter valued at approximately $2,471,000. State of Wisconsin Investment Board lifted its position in Fred's by 181.7% during the third quarter. State of Wisconsin Investment Board now owns 546,700 shares of the company’s stock valued at $3,521,000 after purchasing an additional 352,600 shares during the period. Dynamic Technology Lab Private Ltd bought a new position in Fred's during the third quarter valued at approximately $2,237,000. Finally, State Street Corp lifted its position in Fred's by 32.8% during the first quarter. State Street Corp now owns 1,126,791 shares of the company’s stock valued at $14,761,000 after purchasing an additional 278,250 shares during the period.

The company has a debt-to-equity ratio of 0.51, a current ratio of 1.90 and a quick ratio of 0.45.

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Fred's Company Profile

Fred’s, Inc (Fred’s) is engaged in the sale of general merchandise through its retail discount stores and full service pharmacies. The Company sells general merchandise to its over 20 franchisees. The Company has approximately 660 retail stores, over 370 pharmacies, and approximately three specialty pharmacy facilities located in over 15 states mainly in the Southeastern United States.

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