Back to top

Dollar Tree (DLTR) Q3 Earnings: Can It Reverse the Trend?

Read MoreHide Full Article

Dollar Tree Inc. (DLTR - Free Report) is slated to report third-quarter fiscal 2016 results on Nov 22. Last quarter, the company posted a negative earnings surprise of 1.4%. Further, it has underperformed the Zacks Consensus Estimate in three of the trailing four quarters, with an average negative surprise of 0.5%. Let’s see how things are shaping up for this announcement.

Factors Influencing This Quarter

Dollar Tree has been doing well backed by 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. Additionally, 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 the incorporation of Family Dollar is expected to generate synergies in the long run, the increased costs and cannibalization will likely continue affecting results throughout the integration and re-banner process. Further, foreign currency headwinds remain a concern.

Given these mixed factors, it’s better to wait and see if Dollar Tree can deliver an earnings beat this time around.

DOLLAR TREE INC Price and EPS Surprise


Earnings Whispers

Our proven model does not conclusively show that Dollar Tree is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Dollar Tree currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 78 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Dollar Tree Zacks Rank #3 (Hold) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Hibbett Sports Inc. (HIBB - Free Report) is slated to report earnings on Nov 18 and currently has an Earnings ESP of +2.70%. The stock holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Foot Locker Inc. (FL - Free Report) , with a Zacks Rank #2 and an Earnings ESP of +0.90%, is scheduled to release earnings on Nov 18.

Burlington Stores, Inc. (BURL - Free Report) , with a Zacks Rank #2 and an Earnings ESP of +6.06%, is slated to release earnings on Nov 22.

Zacks' Top Investment Ideas for Long-Term Profit

How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>

More from Zacks Analyst Blog

You May Like