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Factors Likely to Influence Dollar Tree's (DLTR) Q1 Earnings

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Dollar Tree, Inc. (DLTR - Free Report) is slated to release first-quarter fiscal 2020 results on May 28. We note that the company has trailing four-quarter positive earnings surprise of 1.5%, on average.

The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings is pegged at 92 cents per share, which indicates a 19.3% decline from the figure reported in the year-ago quarter. Notably, the consensus mark has moved down by 2 cents in the past seven days. The Zacks Consensus Estimate for revenues is pegged at $6.1 billion, which calls for 4.5% growth from the prior-year quarter’s reported number.

Key Factors to Note

On its last earnings call, Dollar Tree predicted sales for the fiscal first-quarter to be impacted by uncertain COVID-19 impacts. Particularly, weaker than expected sales for some discretionary products owing to drab Easter season is likely to have hurt the top line in the quarter under review. This led management to withdraw its first-quarter and fiscal 2020 view.

Further, it has been witnessing soft margins for quite some time now due to higher tariffs, increased occupancy, shrink and distribution costs, as well as higher SG&A costs. Notably, the company’s gross and operating margins have been dismal over the last eight quarters.  Any further rise in costs is likely to get reflected in the company’s first-quarter results.

However, the company is likely to have benefited from the sudden hike in demand for essential goods like food, water, cleaning supplies, sanitizers, paper products, home goods, and over-the-counter cold and flu medicines. This spike in demand is likely to show on the company’s top-line performance in the to-be-reported quarter.

Dollar Tree, Inc. Price and EPS Surprise

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Dollar Tree this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dollar Tree carries a Zacks Rank #3 but an Earnings ESP of -25.33% makes surprise prediction difficult.

Stocks With Favorable Combination

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.

Big Lots (BIG - Free Report) has an Earnings ESP of +19.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Kroger Co. (KR - Free Report) has an Earnings ESP of + 1.70% and a Zacks Rank #3.

Williams Sonoma (WSM - Free Report) has an Earnings ESP of + 264.32% and a Zacks Rank #3.

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