Markets

The Fundamental Case for and Against Fred’s, Inc. (FRED)

Fred’s, Inc. (NASDAQ:FRED) is an interesting stock at present. Now trading with a market value of 69.19M, the company has a mix of catalysts and obstacles that spring from the nature of its operations. In light of the many issues surrounding this company, we thought it was a good time to take a close look at the numbers in order to form a realistic perspective on the fundamental picture for this stock.

Fred’s, Inc. (NASDAQ:FRED) Fundamentals That Matter

It’s generally a good idea to start with the most fundamental piece of the picture: the balance sheet. The balance sheet health of any company plays a key role in its ability to meet its obligations and maintain the faith of its investment base. For FRED, the company currently has 6.57 million of cash on the books, which is offset by 65,000 in current liabilities. The trend over time is important to note. In this case, the company’s debt has been growing. The company also has 597.57 million in total assets, balanced by 416.52 million in total liabilities, which should give you a sense of the viability of the company under any number of imagined business contexts.

Fred’s, Inc. (FRED) saw -1.36 million in free cash flow last quarter, representing a quarterly net change in cash of 1.46 million. Perhaps most importantly where cash movements are concerned, the company saw about 1.56 million in net operating cash flow.

Fred’s, Inc. (NASDAQ:FRED) Revenue Growth Potential

As far as key trends that demonstrate something of the future investment potential of this stock, we need to take a closer look at the top line, first and foremost. Last quarter, the company saw 477.29 million in total revenues. That represents a quarterly year/year change in revenues of -0.10 in sequential terms, the FRED saw sales decline by -0.03.



But what about the bottom line? After all, that’s what really matters in the end. Fred’s, Inc. (FRED) is intriguing when broken down to its core data. The cost of selling goods last quarter was 372.86 million, yielding a gross basic income of 104.43 million. For shareholders, given the total diluted outstanding shares of 37.12 million, this means overall earnings per share of -0.87.

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