Why Dollar Tree Earnings Are So Important

November 22, 2016 by Chris Lange

Dollar Tree, Inc. (NASDAQ: DLTR) reported its fiscal third-quarter financial results on Tuesday before the markets opened. Overall the continued progress in building the foundation of a consolidated Dollar Tree and Family Dollar has been effective in driving earnings for this quarter. It also helps that guidance took a noticeable uptick looking ahead to the holiday season.

The company said that it had $0.81 in earnings per share (EPS) and $5.0 billion in revenue. The consensus estimates from Thomson Reuters called for $0.78 in EPS and $5.08 billion in revenue. The same period from last year had $0.49 in EPS and $4.95 billion in revenue.

Same-store sales increased 1.7%, on a constant currency basis, compared to a 2.1% increase in the prior-year period. Adjusted for the impact of Canadian currency fluctuations, the same-store sales increase was 1.8%. The same-store sales growth, representing the company’s 35th consecutive quarter of positive same-store sales, was driven by increases in comparable customer count and average ticket.

In terms of the guidance for the fiscal fourth-quarter, the company expects to see EPS in the range of $1.24 to $1.33 (up from the previous level of $1.21 to $1.30) and net sales in the range of $5.59 billion to $5.69 billion, based on low single-digit increases in same-store sales for the Dollar Tree and Family Dollar segments. The consensus estimates are calling for $1.29 in EPS and $5.63 billion in revenue.

On the books, cash, cash equivalents, and short-term investments totaled $737.8 million at the end of the quarter, versus $740.1 million at the end of the previous fiscal year.

Bob Sasser, CEO of Dollar Tree, commented:

I am proud of our team’s achievements in our third quarter. Our results demonstrated a solid performance in our Dollar Tree segment, continued meaningful progress in our integration of Family Dollar, and our ability to refinance and pre-pay a portion of our outstanding debt in order to reduce future interest costs. After adding back $0.09 per share of expenses related to our debt refinancing, our operating performance of $0.81 per diluted share was near the top end of our third quarter EPS guidance range of $0.76 to $0.82.

Shares of Dollar Tree closed Monday at $81.99, with a consensus analyst price target of $91.25 and a 52-week trading range of $68.51 to $99.93. Following the release of the earnings report, the stock was up 8.5% at $89.00 in early trading indications Tuesday.

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