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Will Dollar Tree (DLTR) Retain Its Earnings Beat Streak in Q3?
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Dollar Tree, Inc. (DLTR - Free Report) is likely to register increases in the top and bottom lines when it reports third-quarter fiscal 2022 results on Nov 22, before market open. The Zacks Consensus Estimate for revenues is pegged at $6.84 billion, indicating an improvement of 6.6% from the prior-year quarter’s reported figure.
The bottom line of the operator of discount variety retail stores is also expected to increase year over year. The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at $1.17 per share, suggesting growth of 21.9% from the year-ago period’s reported figure. The consensus mark has moved up by a penny in the past seven days.
We expect the company’s fiscal third-quarter total revenues to increase 6.5% year over year to $6,833.7 million and the bottom line to improve 18.5% to $1.14 per share.
The company has a trailing four-quarter earnings surprise of 8.6%, on average. In the last reported quarter, the Chesapeake, VA-based company outperformed the Zacks Consensus Estimate by 1.3%.
Dollar Tree’s third-quarter fiscal 2022 results are likely to have gained from continued demand for its products, resulting in sales growth and improved margins. The completion of the conversion of the Dollar Tree banner’s $1.25 price point initiative has been boosting the top line. This is expected to have persisted in the fiscal third quarter. Its Combo store and H2 renovation initiatives also bode well.
The company’s restructuring and expansion initiatives, including store openings and improvement of distribution centers, are likely to have boosted revenues in the to-be-reported quarter. Dollar Tree has been on track to leverage Family Dollar and Dollar Tree distribution center systems, and combined merchandise.
The company’s digital and omni-channel capabilities, and same-day delivery service with Instacart are also expected to have driven traffic trends in the fiscal third quarter. The aforementioned factors instill optimism regarding the upcoming results.
On the last reported quarter’s earnings call, the company was optimistic about comps growth in the fiscal third quarter, driven by gains in both Dollar Tree and Family Dollar segments. Management predicted consolidated net sales of $6.75-$6.87 billion for third-quarter fiscal 2022, with enterprise same-store sales growth in the mid-single digits.
Dollar Tree’s margins are likely to have benefited from measures to control costs. Despite the continued increase in freight costs and SG&A expenses, the gross margin is expected to reflect gains from improved initial mark-on, and distribution and occupancy cost leverage.
However, on the last reported quarter’s earnings call, management announced plans to make competitive pricing investments in the Family Dollar chain to improve store productivity and profitability, which is anticipated to weigh on the gross margin in the second half of fiscal 2022. Additionally, the company expected inflationary pressures and an unfavorable product mix related to consumers’ shift toward lower-margin consumable products to continue in the second half.
The company expected gross and operating margins for the Family Dollar segment to remain pressured in the second half mainly due to the aforementioned pricing investments as well as the shift in consumer demand to consumables. Driven by the accelerated price investment, the company expects the Family Dollar segment to report a breakeven operating margin in the third and fourth quarters of fiscal 2022 on a combined basis. This marks a decline from its first half’s margin of 2%.
Driven by these investments and the shift of consumers’ preference to more need-based consumable goods, the company expects the gross margin to be pressured in the second half of fiscal 2022. It anticipates earnings of $1.05-$1.20 per share for the fiscal third quarter.
What the Zacks Model Unveils
Our proven conclusively predicts an earnings beat for Dollar Tree this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Dollar Tree has a Zacks Rank #3 and an Earnings ESP of +6.31%.
Other Stocks With Favorable Combination
Here are some other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this season:
Macy's (M - Free Report) currently has an Earnings ESP of +18.92% and a Zacks Rank of 2. The company is likely to register decreases in the top and bottom lines when it reports third-quarter fiscal 2022 numbers. The consensus mark for M’s quarterly earnings has moved up by a penny in the past 30 days to 19 cents per share. However, the consensus estimate suggests an 84.6% decline from the year-ago quarter’s reported number.
Macy’s top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $5.17 billion, which suggests a rise of 4.9% from the figure reported in the prior-year quarter.
Burlington Stores (BURL - Free Report) currently has an Earnings ESP of +8.48% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports third-quarter fiscal 2022 numbers. The consensus mark for BURL’s quarterly earnings has moved up by a penny in the past seven days to 52 cents per share. The consensus estimate suggests a 61.8% decline from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Burlington Stores’ quarterly revenues is pegged at $2.1 billion, which suggests a decline of 10.9% from the figure reported in the prior-year quarter.
DICK'S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +17.23% and a Zacks Rank of 3. The company is likely to register top and bottom-line declines when it reports third-quarter fiscal 2022 results. The consensus mark for DKS’ quarterly revenues is pegged at $2.7 billion, which suggests a decline of 1.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for DICK'S Sporting’s earnings have moved up 1.4% to $2.24 per share in the past 30 days. The consensus estimate indicates a 29.8% decline from the year-ago quarter’s reported figure.
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Will Dollar Tree (DLTR) Retain Its Earnings Beat Streak in Q3?
Dollar Tree, Inc. (DLTR - Free Report) is likely to register increases in the top and bottom lines when it reports third-quarter fiscal 2022 results on Nov 22, before market open. The Zacks Consensus Estimate for revenues is pegged at $6.84 billion, indicating an improvement of 6.6% from the prior-year quarter’s reported figure.
The bottom line of the operator of discount variety retail stores is also expected to increase year over year. The Zacks Consensus Estimate for fiscal third-quarter earnings is pegged at $1.17 per share, suggesting growth of 21.9% from the year-ago period’s reported figure. The consensus mark has moved up by a penny in the past seven days.
We expect the company’s fiscal third-quarter total revenues to increase 6.5% year over year to $6,833.7 million and the bottom line to improve 18.5% to $1.14 per share.
The company has a trailing four-quarter earnings surprise of 8.6%, on average. In the last reported quarter, the Chesapeake, VA-based company outperformed the Zacks Consensus Estimate by 1.3%.
Dollar Tree, Inc. Price and EPS Surprise
Dollar Tree, Inc. price-eps-surprise | Dollar Tree, Inc. Quote
Factors to Consider
Dollar Tree’s third-quarter fiscal 2022 results are likely to have gained from continued demand for its products, resulting in sales growth and improved margins. The completion of the conversion of the Dollar Tree banner’s $1.25 price point initiative has been boosting the top line. This is expected to have persisted in the fiscal third quarter. Its Combo store and H2 renovation initiatives also bode well.
The company’s restructuring and expansion initiatives, including store openings and improvement of distribution centers, are likely to have boosted revenues in the to-be-reported quarter. Dollar Tree has been on track to leverage Family Dollar and Dollar Tree distribution center systems, and combined merchandise.
The company’s digital and omni-channel capabilities, and same-day delivery service with Instacart are also expected to have driven traffic trends in the fiscal third quarter. The aforementioned factors instill optimism regarding the upcoming results.
On the last reported quarter’s earnings call, the company was optimistic about comps growth in the fiscal third quarter, driven by gains in both Dollar Tree and Family Dollar segments. Management predicted consolidated net sales of $6.75-$6.87 billion for third-quarter fiscal 2022, with enterprise same-store sales growth in the mid-single digits.
Dollar Tree’s margins are likely to have benefited from measures to control costs. Despite the continued increase in freight costs and SG&A expenses, the gross margin is expected to reflect gains from improved initial mark-on, and distribution and occupancy cost leverage.
However, on the last reported quarter’s earnings call, management announced plans to make competitive pricing investments in the Family Dollar chain to improve store productivity and profitability, which is anticipated to weigh on the gross margin in the second half of fiscal 2022. Additionally, the company expected inflationary pressures and an unfavorable product mix related to consumers’ shift toward lower-margin consumable products to continue in the second half.
The company expected gross and operating margins for the Family Dollar segment to remain pressured in the second half mainly due to the aforementioned pricing investments as well as the shift in consumer demand to consumables. Driven by the accelerated price investment, the company expects the Family Dollar segment to report a breakeven operating margin in the third and fourth quarters of fiscal 2022 on a combined basis. This marks a decline from its first half’s margin of 2%.
Driven by these investments and the shift of consumers’ preference to more need-based consumable goods, the company expects the gross margin to be pressured in the second half of fiscal 2022. It anticipates earnings of $1.05-$1.20 per share for the fiscal third quarter.
What the Zacks Model Unveils
Our proven conclusively predicts an earnings beat for Dollar Tree this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Dollar Tree has a Zacks Rank #3 and an Earnings ESP of +6.31%.
Other Stocks With Favorable Combination
Here are some other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat this season:
Macy's (M - Free Report) currently has an Earnings ESP of +18.92% and a Zacks Rank of 2. The company is likely to register decreases in the top and bottom lines when it reports third-quarter fiscal 2022 numbers. The consensus mark for M’s quarterly earnings has moved up by a penny in the past 30 days to 19 cents per share. However, the consensus estimate suggests an 84.6% decline from the year-ago quarter’s reported number.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Macy’s top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $5.17 billion, which suggests a rise of 4.9% from the figure reported in the prior-year quarter.
Burlington Stores (BURL - Free Report) currently has an Earnings ESP of +8.48% and a Zacks Rank of 3. The company is likely to register declines in the top and bottom lines when it reports third-quarter fiscal 2022 numbers. The consensus mark for BURL’s quarterly earnings has moved up by a penny in the past seven days to 52 cents per share. The consensus estimate suggests a 61.8% decline from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for Burlington Stores’ quarterly revenues is pegged at $2.1 billion, which suggests a decline of 10.9% from the figure reported in the prior-year quarter.
DICK'S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +17.23% and a Zacks Rank of 3. The company is likely to register top and bottom-line declines when it reports third-quarter fiscal 2022 results. The consensus mark for DKS’ quarterly revenues is pegged at $2.7 billion, which suggests a decline of 1.7% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for DICK'S Sporting’s earnings have moved up 1.4% to $2.24 per share in the past 30 days. The consensus estimate indicates a 29.8% decline from the year-ago quarter’s reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.