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Dollar Tree, Inc. (DLTR - Analyst Report) – a leading discount variety store that sells products for $1.0 or less –is likely to beat the expectations while reporting its fiscal 2012 fourth-quarter results on Feb 27.

Why a Likely Positive Surprise?

Our proven model shows that Dollar Tree may beat the earnings as it has the right combination of 2 key components – Positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #3.

Zacks ESP: Dollar Tree currently has an Earnings ESP of +1.01% since its Most Accurate Estimate stands at $1.00, while the Zacks Consensus Estimate is pegged at 99 cents.

Zacks #3 Rank (Hold): Stocks with Zacks Rank #1, #2 and #3 have significantly higher chances of beating the earnings. The sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement.

The combination of Dollar Tree’s Zacks Rank and Earnings ESP makes us confident regarding a positive earnings beat by the company on Feb 27.

What is Driving the Better-than-Expected Earnings?

Dollar Tree is considered as one of the best-positioned dollar store concepts, especially with its evolving multi-price point chain. We believe that the company is doing a commendable job internally by managing controllable inputs, including reducing stem miles, while increasing back-haul opportunities.

The company continues to generate robust same-store sales growth, driven by its focus on low-priced commodities that cater to the wants and needs of consumers. This in turn boosts the company’s consumer traffic, reflecting continued top-line growth.

The company has met as well as surpassed the Zacks Consensus Estimate in trailing 4 quarters with an average surprise of approximately 4.9%.

Other Stocks to Consider

Dollar Tree is not the only firm we are looking up to this earnings season. Following companies, which are Dollar Tree’s industry peers, are also likely to beat the earnings in the to-be-reported quarter.

RadioShack Corporation (RSH - Analyst Report) has Earnings ESP of +233.33% and carries a Zacks Rank #2 (Buy).

Conns Inc. (CONN - Snapshot Report) with Earnings ESP of +1.89% and Zacks Rank #2 (Buy).

PriceSmart Inc. (PSMT - Snapshot Report) with Earnings ESP of +1.27% and a Zacks Rank #3 (Hold).

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