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Will Dollar Tree (DLTR) Beat Earnings Estimates Again in Q2?
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We expect Dollar Tree Inc. (DLTR - Free Report) to beat expectations when it reports second-quarter fiscal 2016 results on Aug 25. Last quarter, the company delivered a positive earnings surprise of 11.3%.
However, the company has delivered negative earnings surprise in three of the trailing four quarters, with an average negative surprise of 15.9%. Let’s see how things are shaping up for this announcement.
Our proven model shows that Dollar Tree is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: Dollar Tree currently has an Earnings ESP of +4.11%. This is because the Most Accurate estimate of 76 cents is above the Zacks Consensus Estimate of 73 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Dollar Tree carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), #2 or #3 (Hold) have a significantly higher chance of beating earnings. Conversely, sell-rated stocks (Zacks Rank #4 or #5) should never be considered going into an earnings announcement.
The combination of Dollar Tree’s Zacks Rank #2 and positive ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
Dollar Tree has been doing well on the back of its long-term strategies and growth initiatives, including store expansion and productivity gains, tapping of new markets and incorporating innovative sales channels to serve its patrons better. Also, the company’s strategy of increasing consumables mix, rolling out freezers/coolers at stores, along with multi-price point expansion bode well for top-line growth. The company is progressing well with the integration of the Family Dollar buyout. While this integration is expected to generate synergies in the long run, the related costs and cannibalization will continue affecting results throughout the integration and re-banner process.
Nonetheless, the company’s strategic investments in technological advancements and acquisitions bode well. All this, along with the company’s optimistic guidance for fiscal 2016 make us confident about the upcoming results.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
GameStop Corp. (GME - Free Report) , slated to report earnings on Aug 25, has an Earnings ESP of +3.70% and a Zacks Rank #3 .
Sanderson Farms, Inc. , scheduled to report earnings on Aug 25, has an Earnings ESP of +4.96% and a Zacks Rank #1.
Star Bulk Carriers Corp. (SBLK - Free Report) , expected to report earnings on Aug 29, has an Earnings ESP of +13.33% and a Zacks Rank #2.
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Will Dollar Tree (DLTR) Beat Earnings Estimates Again in Q2?
We expect Dollar Tree Inc. (DLTR - Free Report) to beat expectations when it reports second-quarter fiscal 2016 results on Aug 25. Last quarter, the company delivered a positive earnings surprise of 11.3%.
However, the company has delivered negative earnings surprise in three of the trailing four quarters, with an average negative surprise of 15.9%. Let’s see how things are shaping up for this announcement.
DOLLAR TREE INC Price and EPS Surprise
DOLLAR TREE INC Price and EPS Surprise | DOLLAR TREE INC Quote
Why a Likely Positive Surprise?
Our proven model shows that Dollar Tree is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: Dollar Tree currently has an Earnings ESP of +4.11%. This is because the Most Accurate estimate of 76 cents is above the Zacks Consensus Estimate of 73 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Dollar Tree carries a Zacks Rank #2 (Buy). Note that stocks with a Zacks Rank #1 (Strong Buy), #2 or #3 (Hold) have a significantly higher chance of beating earnings. Conversely, sell-rated stocks (Zacks Rank #4 or #5) should never be considered going into an earnings announcement.
The combination of Dollar Tree’s Zacks Rank #2 and positive ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
Dollar Tree has been doing well on the back of its long-term strategies and growth initiatives, including store expansion and productivity gains, tapping of new markets and incorporating innovative sales channels to serve its patrons better. Also, the company’s strategy of increasing consumables mix, rolling out freezers/coolers at stores, along with multi-price point expansion bode well for top-line growth. The company is progressing well with the integration of the Family Dollar buyout. While this integration is expected to generate synergies in the long run, the related costs and cannibalization will continue affecting results throughout the integration and re-banner process.
Nonetheless, the company’s strategic investments in technological advancements and acquisitions bode well. All this, along with the company’s optimistic guidance for fiscal 2016 make us confident about the upcoming results.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
GameStop Corp. (GME - Free Report) , slated to report earnings on Aug 25, has an Earnings ESP of +3.70% and a Zacks Rank #3 .
Sanderson Farms, Inc. , scheduled to report earnings on Aug 25, has an Earnings ESP of +4.96% and a Zacks Rank #1.
Star Bulk Carriers Corp. (SBLK - Free Report) , expected to report earnings on Aug 29, has an Earnings ESP of +13.33% and a Zacks Rank #2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>