Fred's (FRED) Downgraded by Zacks Investment Research

Fred's (NASDAQ:FRED) was downgraded by Zacks Investment Research from a “hold” rating to a “strong sell” rating in a report released on Monday, December 11th.

According to Zacks, “Fred’s shares have underperformed the industry over the past year, mainly due to store closures and dismal comps. We note that comps have been sluggish for some time as a result of low productive discontinued inventory sales, continued increase in generic dispensing rate and lower traffic. Unfortunately, these headwinds weighed on the company’s third-quarter fiscal 2017 results, wherein both the top- and bottom-line results declined year on year and lagged the Zacks Consensus Estimate. In fact, Fred’s posted a loss for the sixth straight time in the third quarter. Moreover, the dismal quarterly performance led management to cancel quarterly dividend to retain free cash flows for reducing debt load and undertake corporate initiatives. Management has also been striving to revive performance through expense reductions and reorganizing pharmacy business to drive scripts and improve services.”

Separately, Loop Capital restated a “hold” rating and issued a $4.00 target price on shares of Fred's in a research note on Thursday, December 7th. Two analysts have rated the stock with a sell rating, three have issued a hold rating and one has issued a buy rating to the stock. Fred's has a consensus rating of “Hold” and a consensus price target of $10.00.

Shares of Fred's (NASDAQ:FRED) traded down $0.01 during midday trading on Monday, reaching $4.04. The company’s stock had a trading volume of 1,385,419 shares, compared to its average volume of 1,220,000. The company has a quick ratio of 0.44, a current ratio of 1.78 and a debt-to-equity ratio of 0.77. Fred's has a 1 year low of $3.57 and a 1 year high of $19.14. The stock has a market capitalization of $154.44, a P/E ratio of -1.08 and a beta of 1.81.

Fred's (NASDAQ:FRED) last issued its earnings results on Wednesday, December 6th. The company reported ($0.42) EPS for the quarter, missing analysts’ consensus estimates of ($0.13) by ($0.29). Fred's had a negative net margin of 6.80% and a negative return on equity of 9.94%. The firm had revenue of $493.60 million during the quarter, compared to analysts’ expectations of $499.77 million. During the same quarter last year, the firm earned ($0.27) EPS. The business’s revenue for the quarter was down 4.5% compared to the same quarter last year. equities research analysts forecast that Fred's will post -0.55 EPS for the current fiscal year.

Fred's announced that its board has initiated a stock repurchase program on Wednesday, December 6th that authorizes the company to buyback 3,800,000 shares. This buyback authorization authorizes the company to buy shares of its stock through open market purchases. Stock buyback programs are generally an indication that the company’s board believes its stock is undervalued.

In related news, Director Timothy A. Barton purchased 85,000 shares of the firm’s stock in a transaction dated Wednesday, December 13th. The stock was bought at an average price of $3.94 per share, for a total transaction of $334,900.00. Following the purchase, the director now owns 113,123 shares in the company, valued at approximately $445,704.62. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this link. Corporate insiders own 6.90% of the company’s stock.

Several institutional investors and hedge funds have recently added to or reduced their stakes in the company. Arizona State Retirement System boosted its stake in shares of Fred's by 1.6% during the 2nd quarter. Arizona State Retirement System now owns 18,675 shares of the company’s stock worth $172,000 after acquiring an additional 300 shares in the last quarter. Louisiana State Employees Retirement System boosted its stake in shares of Fred's by 2.1% during the 2nd quarter. Louisiana State Employees Retirement System now owns 14,600 shares of the company’s stock worth $135,000 after acquiring an additional 300 shares in the last quarter. The Manufacturers Life Insurance Company boosted its stake in shares of Fred's by 1.4% during the 2nd quarter. The Manufacturers Life Insurance Company now owns 28,416 shares of the company’s stock worth $263,000 after acquiring an additional 405 shares in the last quarter. Texas Permanent School Fund boosted its stake in shares of Fred's by 2.5% during the 2nd quarter. Texas Permanent School Fund now owns 26,114 shares of the company’s stock worth $241,000 after acquiring an additional 648 shares in the last quarter. Finally, Public Employees Retirement System of Ohio boosted its stake in shares of Fred's by 6.3% during the 2nd quarter. Public Employees Retirement System of Ohio now owns 13,594 shares of the company’s stock worth $125,000 after acquiring an additional 804 shares in the last quarter.

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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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