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Why Earnings Outlooks Are More Important Than This Quarter's Results

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With the financial reporting season underway, one of the most important considerations is not the most recent quarter's earnings results, but the earnings outlook companies are giving for the remainder of the year.

One market sector that I like to watch is the retail area that sells to the average American, as this helps give a clear picture of the underlying fundamentals of the U.S. economy.

Family Dollar Stores, Inc. (NYSE/FDO) just released its earnings outlook for the remainder of the year, and it was far below what analysts had expected. In January of this year, Family Dollar offered an expected earnings outlook for fiscal 2013 of approximately $4.20 per share; this has now been reduced to $3.93 a share. (Source: Burritt, C., "Family Dollar Cuts Profit Forecast as Shoppers Cut Back," Bloomberg, April 10, 2013.)

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