Week in Preview: A Quiet Start to the Second Half of the Year


It may be good for the jittery markets that things will be rather quiet on the economic calendar this coming week following the U.S. Independence Day holiday.

Markets in the U.S. are closed Monday for the holiday. The Institute of Supply Management (ISM) is scheduled to release the results of its next service sector survey Tuesday morning. This release is expected to show no significant change from the bullish May nonmanufacturing index.

Tuesday afternoon will bring the numbers for Treasury securities outstanding, or public debt, for June.

Scheduled for Thursday is a look at consumer credit outstanding for May, courtesy of the Federal Reserve, as well as the initial jobless claims for last week from the Department of Labor. The former is expected to return to the red, while the latter is expected to shrink by 10,000.

And Census Bureau's wholesale trade numbers for May round out the week on Friday. Inventories are expected to remain unchanged.

Elsewhere, also look for the Bank of England and the European Central Bank to announce their most recent interest rate decisions this week.

Family Dollar Expected to Report Earnings Growth

The second half of the year may have arrived, but the new earnings season doesn't begin until Alcoa (AA) reports its second-quarter results on July 12. The most prominent earnings release scheduled for this week comes from Family Dollar Stores Inc. (FDO).

North Carolina-based Family Dollar, the second largest dollar store chain in the U.S., reported record earnings and declared a quarterly dividend during its fiscal third quarter. Analysts surveyed by Thomson Reuters expect Family Dollar to report Wednesday that earnings have risen more than 18% from the same period of the previous year to $0.76 per share.

Revenue for the three months that ended in May is expected to have risen more than 8% in the past year to $2 billion. So far, the consensus forecast for the full year has EPS up about 20% to $2.59 and revenue up about 6% to $7.9 billion. The company's per-share earnings have beaten consensus estimates in past four quarters by about two cents.

Family Dollar's long-term EPS growth forecast of 13.6% is better than that of retailer Wal-Mart (WMT). Family Dollar's earnings multiple is 13x, less than the retail average and the trailing PE of 16.6. It reported more cash on hand than long-term debt in the most recent period, and short interest fell off in June. The First Call recommendation of 25 analysts is to buy FDO and has been for 90 days. Zacks is looking for another positive surprise from Family Dollar this week. Shares are about 5% higher than three months ago, despite retreating from a recent 52-week high of $42.07.

Other companies expected to post earnings growth this week include Helen of Troy Ltd. (HELE) and WD-40 Co. (WDFC).