We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can the Rebound in Dollar Tree (DLTR) Stock Continue as Q3 Earnings Approach?
Read MoreHide Full Article
Rebounding 20% from its 52-week low of $60 a share seen in early November, investors may be wondering if the recent rally in Dollar Tree (DLTR - Free Report) stock can continue.
To that point, Dollar Tree stock still trades 50% below a one-year high of over $150 last March but has seen nice momentum ahead of its Q3 report on Wednesday, December 4.
That said, Target’s (TGT - Free Report) recent plunge after reporting lackluster Q3 results may have investors on edge and will have Dollar Tree under Wall Street’s scope.
Image Source: Zacks Investment Research
Dollar Tree's Q3 Expectations (Overview)
Based on Zacks estimates, Dollar Tree’s Q3 sales are expected at $7.45 billion, a 2% increase from a year ago. On the bottom line, Q3 earnings are expected to increase 10% to $1.07 per share versus EPS of $0.97 in the comparative quarter.
However, Dollar Tree most recently missed Q2 earnings expectations by -37% in September with EPS of $0.67 compared to the Zacks Consensus of $1.03. This was also down from $0.91 a share in the prior-year quarter as the discount retailer hasn’t been immune to macroeconomic concerns while general liability claims have also affected Dollar Tree’s net income.
Slower growth among Dollar Tree’s subsidiary Family Dollar has been a concern as well with the company missing Q2 sales estimates of $7.5 billion by -2%. Like Target, shrink (retail theft) among other inventory issues had previously weighed on profits as Dollar Tree has missed earnings expectations in three of its last four quarterly reports with an average EPS surprise of -10.85%.
Image Source: Zacks Investment Research
Tracking Dollar Tree’s Potential Rebound
Overall, Dollar Tree’s total sales are now projected to be virtually flat in its current fiscal 2025 with projections at $30.71 billion. Optimistaclly, FY26 sales are expected to increase 4% to $31.97 billion.
Annual earnings are forecasted to dip -9% in FY25 but are projected to rebound and rise 13% in FY26 to $6.04 per share.
Image Source: Zacks Investment Research
DLTR Valuation Comparison
Making Dollar Tree’s potential rebound more intriguing is that DLTR trades at 13.6X forward earnings compared to the benchmark S&P 500’s 25.5X. Furthermore, Dollar Tree stock trades beneath Target’s 15.1X forward earnings multiple and at a very sharp discount to their Zacks Retail-Discount Stores Industry average of 21.2X.
Notably, Dollar Tree shares trade at just 0.5X sales which is roughly on par with Target and the industry average.
Image Source: Zacks Investment Research
Bottom Line
Ahead of its Q3 report, Dollar Tree stock lands a Zacks Rank #3 (Hold). It’s very tempting to buy Dollar Tree shares near historical lows in regard to its P/E valuation. Still, the continued rally in DLTR will likely depend on Dollar Tree being able to reach or exceed Q3 expectations and hopefully offering positive guidance.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Can the Rebound in Dollar Tree (DLTR) Stock Continue as Q3 Earnings Approach?
Rebounding 20% from its 52-week low of $60 a share seen in early November, investors may be wondering if the recent rally in Dollar Tree (DLTR - Free Report) stock can continue.
To that point, Dollar Tree stock still trades 50% below a one-year high of over $150 last March but has seen nice momentum ahead of its Q3 report on Wednesday, December 4.
That said, Target’s (TGT - Free Report) recent plunge after reporting lackluster Q3 results may have investors on edge and will have Dollar Tree under Wall Street’s scope.
Image Source: Zacks Investment Research
Dollar Tree's Q3 Expectations (Overview)
Based on Zacks estimates, Dollar Tree’s Q3 sales are expected at $7.45 billion, a 2% increase from a year ago. On the bottom line, Q3 earnings are expected to increase 10% to $1.07 per share versus EPS of $0.97 in the comparative quarter.
However, Dollar Tree most recently missed Q2 earnings expectations by -37% in September with EPS of $0.67 compared to the Zacks Consensus of $1.03. This was also down from $0.91 a share in the prior-year quarter as the discount retailer hasn’t been immune to macroeconomic concerns while general liability claims have also affected Dollar Tree’s net income.
Slower growth among Dollar Tree’s subsidiary Family Dollar has been a concern as well with the company missing Q2 sales estimates of $7.5 billion by -2%. Like Target, shrink (retail theft) among other inventory issues had previously weighed on profits as Dollar Tree has missed earnings expectations in three of its last four quarterly reports with an average EPS surprise of -10.85%.
Image Source: Zacks Investment Research
Tracking Dollar Tree’s Potential Rebound
Overall, Dollar Tree’s total sales are now projected to be virtually flat in its current fiscal 2025 with projections at $30.71 billion. Optimistaclly, FY26 sales are expected to increase 4% to $31.97 billion.
Annual earnings are forecasted to dip -9% in FY25 but are projected to rebound and rise 13% in FY26 to $6.04 per share.
Image Source: Zacks Investment Research
DLTR Valuation Comparison
Making Dollar Tree’s potential rebound more intriguing is that DLTR trades at 13.6X forward earnings compared to the benchmark S&P 500’s 25.5X. Furthermore, Dollar Tree stock trades beneath Target’s 15.1X forward earnings multiple and at a very sharp discount to their Zacks Retail-Discount Stores Industry average of 21.2X.
Notably, Dollar Tree shares trade at just 0.5X sales which is roughly on par with Target and the industry average.
Image Source: Zacks Investment Research
Bottom Line
Ahead of its Q3 report, Dollar Tree stock lands a Zacks Rank #3 (Hold). It’s very tempting to buy Dollar Tree shares near historical lows in regard to its P/E valuation. Still, the continued rally in DLTR will likely depend on Dollar Tree being able to reach or exceed Q3 expectations and hopefully offering positive guidance.