We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
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.
Dollar Tree (DLTR) Up 9% Since Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Dollar Tree, Inc. (DLTR - Free Report) . Shares have added about 9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Dollar Tree Q3 Earnings Beat, View Up
Dollar Tree posted third-quarter fiscal 2017 results, wherein both the earnings and sales topped estimates and improved year over year. Further, management raised outlook for fiscal 2017 and provided a solid view for the fiscal fourth quarter.
Quarter in Detail
The company’s quarterly adjusted earnings of $1.01 per share jumped 40.3% year over year, and surpassed the Zacks Consensus Estimate of 90 cents. Moreover, earnings exceeded the higher end of company’s guidance range of 83-90 cents per share.
Consolidated net sales advanced 6.3% to $5,316.6 million in the quarter, beating the Zacks Consensus Estimate of $5,282 million.
Comps for the quarter increased 3.2% in constant-currency, driven by improved customer count and average ticket. Including the impact of Canadian currency fluctuations, comps improved 3.3%. While Dollar Tree banner posted comps growth of 5% (in constant-currency), comps at the Family Dollar banner climbed 1.5%.
The company’s quarterly gross profit advanced 9.6% year over year to $1,666 million, with the gross margin expanding 90 basis points (bps) to 31.3%. The margin enhancement came on the back of reduced merchandise costs, lower markdowns and occupancy expenses, as a percentage of sales.
Selling, general and administrative expenses dropped 30 bps to 23.3% of sales, thanks to reduced depreciation, healthcare costs and store operating costs due to lower utility costs, as a percentage of sales. This was somewhat offset by increased hourly payroll and incentive compensation expenses as well as higher operating and corporate expenses.
Balance Sheet
Dollar Tree ended the quarter with cash and cash equivalents of $400.1 million, net merchandise inventories of $3,397.8 million, net long-term debt of $5,557 million and shareholders’ equity of $6,116.5 million.
Store Update
Dollar Tree opened 169 outlets, expanded or relocated 23 outlets, and shuttered six outlets during the quarter.
Looking Ahead
Robust fiscal third-quarter results and progress on Family Dollar integration encouraged management to raise the guidance for fiscal 2017. Further, the company provided a solid outlook for the fiscal fourth quarter.
Management now forecasts net sales for fiscal 2017 (which will contain an additional week) in the band of $22.20-$22.31 billion, compared with the old projection of $22.07-$22.28 billion. The guidance stems from square footage growth estimate of 3.7% and comps improvement expected in low-single digits.
Earnings per share for fiscal 2017 are now expected to be in the range of $4.64-$4.73, which includes a receivable impairment charge of 14 cents spent in the first half of fiscal 2017. Earlier, management projected earnings in a band of $4.44-$4.60 per share for fiscal 2017. The company anticipates the additional 53rd week to increase sales by $400-$430 million and earnings by 19-22 cents per share.
For the fiscal fourth quarter, consolidated sales are projected in the range of $6.32-$6.43 billion, driven by comps growth in a low-single digit rise range for the combined entity. Earnings are anticipated in the range of $1.80-$1.89 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter. While looking back an additional 30 days, we can see even more upward momentum. There have been seven moves higher in the last two months.
At this time, Dollar Tree's stock has an average Growth Score of C, though it is doing a bit better on the momentum front with a B. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is more suitable for momentum investors than value and growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy).
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Dollar Tree (DLTR) Up 9% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Dollar Tree, Inc. (DLTR - Free Report) . Shares have added about 9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Dollar Tree Q3 Earnings Beat, View Up
Dollar Tree posted third-quarter fiscal 2017 results, wherein both the earnings and sales topped estimates and improved year over year. Further, management raised outlook for fiscal 2017 and provided a solid view for the fiscal fourth quarter.
Quarter in Detail
The company’s quarterly adjusted earnings of $1.01 per share jumped 40.3% year over year, and surpassed the Zacks Consensus Estimate of 90 cents. Moreover, earnings exceeded the higher end of company’s guidance range of 83-90 cents per share.
Consolidated net sales advanced 6.3% to $5,316.6 million in the quarter, beating the Zacks Consensus Estimate of $5,282 million.
Comps for the quarter increased 3.2% in constant-currency, driven by improved customer count and average ticket. Including the impact of Canadian currency fluctuations, comps improved 3.3%. While Dollar Tree banner posted comps growth of 5% (in constant-currency), comps at the Family Dollar banner climbed 1.5%.
The company’s quarterly gross profit advanced 9.6% year over year to $1,666 million, with the gross margin expanding 90 basis points (bps) to 31.3%. The margin enhancement came on the back of reduced merchandise costs, lower markdowns and occupancy expenses, as a percentage of sales.
Selling, general and administrative expenses dropped 30 bps to 23.3% of sales, thanks to reduced depreciation, healthcare costs and store operating costs due to lower utility costs, as a percentage of sales. This was somewhat offset by increased hourly payroll and incentive compensation expenses as well as higher operating and corporate expenses.
Balance Sheet
Dollar Tree ended the quarter with cash and cash equivalents of $400.1 million, net merchandise inventories of $3,397.8 million, net long-term debt of $5,557 million and shareholders’ equity of $6,116.5 million.
Store Update
Dollar Tree opened 169 outlets, expanded or relocated 23 outlets, and shuttered six outlets during the quarter.
Looking Ahead
Robust fiscal third-quarter results and progress on Family Dollar integration encouraged management to raise the guidance for fiscal 2017. Further, the company provided a solid outlook for the fiscal fourth quarter.
Management now forecasts net sales for fiscal 2017 (which will contain an additional week) in the band of $22.20-$22.31 billion, compared with the old projection of $22.07-$22.28 billion. The guidance stems from square footage growth estimate of 3.7% and comps improvement expected in low-single digits.
Earnings per share for fiscal 2017 are now expected to be in the range of $4.64-$4.73, which includes a receivable impairment charge of 14 cents spent in the first half of fiscal 2017. Earlier, management projected earnings in a band of $4.44-$4.60 per share for fiscal 2017. The company anticipates the additional 53rd week to increase sales by $400-$430 million and earnings by 19-22 cents per share.
For the fiscal fourth quarter, consolidated sales are projected in the range of $6.32-$6.43 billion, driven by comps growth in a low-single digit rise range for the combined entity. Earnings are anticipated in the range of $1.80-$1.89 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two revisions higher for the current quarter. While looking back an additional 30 days, we can see even more upward momentum. There have been seven moves higher in the last two months.
Dollar Tree, Inc. Price and Consensus
Dollar Tree, Inc. Price and Consensus | Dollar Tree, Inc. Quote
VGM Scores
At this time, Dollar Tree's stock has an average Growth Score of C, though it is doing a bit better on the momentum front with a B. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is more suitable for momentum investors than value and growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy).