Why Analysts Are Backing Off Dollar Tree
Dollar Tree reported weaker-than-expected fiscal fourth-quarter results, and analysts are taking shots at the dollar store and cutting their targets.
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Dollar Tree Inc. (NASDAQ: DLTR) reported weaker-than-expected fiscal fourth-quarter results on Wednesday, and there was a very strong reaction from investors pushing the shares much lower. While this settled down and the stock made a small recovery on Thursday, analysts are taking shots at the dollar store and cutting their targets.
24/7 Wall St. has included some brief highlights from the earnings report, as well as what analysts said about Dollar Tree afterward.
The dollar store said that it had $1.89 in earnings per share (EPS) on $6.36 billion in revenue, which compared with consensus estimates from Thomson Reuters of $1.90 in EPS on revenue of $6.39 billion. The same period of last year reportedly had EPS of $1.36 and $5.64 billion in revenue.
During the quarter, enterprise same-store sales increased 2.4% on a constant currency basis. The same-store sales growth was driven by increases in average ticket and comparable transaction count. Same-store sales for the Dollar Tree banner increased 3.8% on a constant currency basis (or 3.9% when adjusted to include the impact of Canadian currency fluctuations). Same-store sales for the Family Dollar banner increased 1.0%.
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Looking ahead to the fiscal first quarter, the company expects to see EPS in the range of $1.18 to $1.25 and revenues between $5.53 billion and $5.63 billion. The consensus estimates are $1.31 in EPS on $5.6 billion in revenue.
Here’s what analysts had to say following the report:
- Morgan Stanley has an Equal Weight rating and lowered its price target to $101 from $112.
- Raymond James has a Buy rating but lowered its price target to $110 from $124.
- MKM Partners downgraded it to Hold from Buy and lowered its target to $98 from $124.
- Buckingham Research has a Buy rating and lowered its price target from $135 to $114.
- BMO Capital Markets has a Hold rating with a $97 price target.
- Barclays upgraded it to Overweight from Equal Weight and raised its target to $100.
- Telsey Advisory Group has an Outperform rating but lowered its target from $130 to $105.
- Deutsche Bank has a Buy rating but lowered its target price to $119 from $137.
Shares of Dollar Tree were last seen up 2.6% at $91.60 on Thursday, with a consensus analyst price target of $117.73 and a 52-week range of $65.63 to $116.65.
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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
