Back to top

Check Out Dollar Tree's (DLTR) Probability to Beat Q4 Earnings

Read MoreHide Full Article

Dollar Tree, Inc. (DLTR - Free Report) is slated to release fourth-quarter fiscal 2018 results on Mar 6, before market open.

Despite a 2.6% earnings beat in the last reported quarter, negative surprises in the other three resulted in average four-quarter miss of 0.5%.

Nevertheless, the Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.92, reflecting 1.6% growth year over year. Notably, estimates have remained stable over the past 30 days. For quarterly sales, the consensus mark stands at $6.2 billion, mirroring a 2.8% decline year over year.

Let’s see how things are shaping up prior to the earnings announcement.

Factors at Play

Dollar Tree’s restructuring and expansion initiatives including store expansion efforts and improving productivity bode well. Additionally, the company is focused on the expansion of its distribution centers to deliver chic customer experience. Its focus on the consumables and discretionary categories as well as the everyday low-price model are expected to drive traffic and sales. Notably, Family Dollar’s consumables business, which forms nearly a third of its products base, reported positive comps for the eighth consecutive quarter in third-quarter fiscal 2018.

Meanwhile, Dollar Tree is on track with the integration of Family Dollar, which is significantly contributing to the company’s results. Notably, sales from the Family Dollar banner constituted nearly 48.5% of the company’s consolidated sales in the last reported quarter. All these initiatives are expected to drive the company’s top- and bottom-lines in the to-be-reported quarter.

These apart, Dollar Tree has been displaying remarkable enterprise same-store sales (comps) growth. Comps remain robust mainly owing to competitive pricing and its strategic store expansion plans including remodeling and relocations. For the fiscal fourth quarter, management had earlier projected consolidated net sales of $6.10-$6.21 billion, with low single-digit comps growth. Earnings are envisioned to be $1.86-$1.95 per share.

However, the company continued to witness cost pressures arising from higher domestic freight and investment in store wages, which impacted margins. It expects the pressures from increased store payroll based on competitive markets and states increasing minimum wage to persist and hurt margins throughout fiscal 2018. Additionally, higher domestic freight and diesel costs are likely to continue.

For fiscal 2018, management projected consolidated net sales of $22.72-$22.83 billion. Also, earnings per share are estimated to be $4.86-$4.95.

What Zacks Model Unveils

Our proven model does not conclusively show that Dollar Tree is likely to beat estimates in fourth-quarter fiscal 2018. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Dollar Tree has a Zacks Rank #2, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

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

Zumiez Inc. (ZUMZ - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank #1. You can see You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie & Fitch Co. (ANF - Free Report) has an Earnings ESP of +2.28% and a Zacks Rank #2.

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +0.62% and a Zacks Rank #3.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>



More from Zacks Analyst Blog

You May Like