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Time to Buy Costco (COST) or Dollar Tree (DLTR) Stock as Earnings Approach?
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Two of the more notable retailers reporting their quarterly results this week are Costco (COST - Free Report) ) and Dollar Tree (DLTR - Free Report) ) with both set to report on Thursday, May 25.
Costco and Dollar Tree stocks are off to solid starts this year with shares of DLTR up +10% to slightly top the S&P 500’s +9% while COST’s +6% has been respectable as well. Notably, shares of COST and DLTR have outperformed the Retail-Discount & Variety Markets’ virtually flat year-to-date performance.
As recognizable leaders in their retail space let’s see if now is a good time to buy Costco or Dollar Tree stock as earnings approach.
Image Source: Zacks Investment Research
Costco Q3 Preview
Buying in bulk appears to be favorable among consumers searching for packaged-sized discounts as high inflation is still a concern, especially among discretionary items.
To that point, Costco’s fiscal third-quarter earnings are projected to be up 5% year over year at $3.32 per share. The Zacks Expected Surprise Prediction (ESP) indicates Costco should reach its bottom-line expectations with the Most Accurate Estimate also having Q3 EPS at $3.32. Sales are expected to come in at $54.57 billion, up 4% from the prior-year quarter.
Image Source: Zacks Investment Research
Dollar Tree Q1 Preview
With consumers still seeking value amid high inflation, Dollar Tree‘s low-priced variety stores may continue to thrive. However, there may still be lingering inventory issues at the company's Family Dollar storefronts which sell common consumer products at a modestly higher price range.
The Zacks Consensus for Dollar Tree’s fiscal first-quarter earnings is $1.51 per share which would be a -36% decline from Q1 EPS of $2.37 a year ago. Alluding to the Family Dollar inventory issues is that Q1 sales are expected to be up 5% YoY at $7.27 billion despite the bottom-line drop. The Zacks ESP does indicate Dollar Tree could exceed its Q1 EPS expectations with the Most Accurate Estimate at $1.53 a share.
Image Source: Zacks Investment Research
Growth & Outlook
Costco’s earnings are now forecasted to rise 9% this year and jump another 8% in FY24 at $15.47 per share. On the top line, sales are projected to be up 6% in FY23 and rise another 5% in FY24 to $254.82 billion.
Image Source: Zacks Investment Research
Looking at Dollar Tree, earnings are expected to dip -8% in its current fiscal 2024 but rebound and climb 19% in FY25 at $7.88 per share. Sales are projected to be up 7% in FY24 and rise another 4% in FY25 to $31.61 billion.
Image Source: Zacks Investment Research
Bottom Line
Costco and Dollar Tree’s growth projections are still intriguing landing both stocks a Zacks Rank #3 (Hold) at the moment. The guidance in their quarterly reports will be crucial for more upside in their stocks and this is especially true for Dollar Tree amid inventory concerns. Still, holding on to Costco and Dollar Tree stock could be rewarding for longer-term investors.
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Time to Buy Costco (COST) or Dollar Tree (DLTR) Stock as Earnings Approach?
Two of the more notable retailers reporting their quarterly results this week are Costco (COST - Free Report) ) and Dollar Tree (DLTR - Free Report) ) with both set to report on Thursday, May 25.
Costco and Dollar Tree stocks are off to solid starts this year with shares of DLTR up +10% to slightly top the S&P 500’s +9% while COST’s +6% has been respectable as well. Notably, shares of COST and DLTR have outperformed the Retail-Discount & Variety Markets’ virtually flat year-to-date performance.
As recognizable leaders in their retail space let’s see if now is a good time to buy Costco or Dollar Tree stock as earnings approach.
Image Source: Zacks Investment Research
Costco Q3 Preview
Buying in bulk appears to be favorable among consumers searching for packaged-sized discounts as high inflation is still a concern, especially among discretionary items.
To that point, Costco’s fiscal third-quarter earnings are projected to be up 5% year over year at $3.32 per share. The Zacks Expected Surprise Prediction (ESP) indicates Costco should reach its bottom-line expectations with the Most Accurate Estimate also having Q3 EPS at $3.32. Sales are expected to come in at $54.57 billion, up 4% from the prior-year quarter.
Image Source: Zacks Investment Research
Dollar Tree Q1 Preview
With consumers still seeking value amid high inflation, Dollar Tree‘s low-priced variety stores may continue to thrive. However, there may still be lingering inventory issues at the company's Family Dollar storefronts which sell common consumer products at a modestly higher price range.
The Zacks Consensus for Dollar Tree’s fiscal first-quarter earnings is $1.51 per share which would be a -36% decline from Q1 EPS of $2.37 a year ago. Alluding to the Family Dollar inventory issues is that Q1 sales are expected to be up 5% YoY at $7.27 billion despite the bottom-line drop. The Zacks ESP does indicate Dollar Tree could exceed its Q1 EPS expectations with the Most Accurate Estimate at $1.53 a share.
Image Source: Zacks Investment Research
Growth & Outlook
Costco’s earnings are now forecasted to rise 9% this year and jump another 8% in FY24 at $15.47 per share. On the top line, sales are projected to be up 6% in FY23 and rise another 5% in FY24 to $254.82 billion.
Image Source: Zacks Investment Research
Looking at Dollar Tree, earnings are expected to dip -8% in its current fiscal 2024 but rebound and climb 19% in FY25 at $7.88 per share. Sales are projected to be up 7% in FY24 and rise another 4% in FY25 to $31.61 billion.
Image Source: Zacks Investment Research
Bottom Line
Costco and Dollar Tree’s growth projections are still intriguing landing both stocks a Zacks Rank #3 (Hold) at the moment. The guidance in their quarterly reports will be crucial for more upside in their stocks and this is especially true for Dollar Tree amid inventory concerns. Still, holding on to Costco and Dollar Tree stock could be rewarding for longer-term investors.