Why Analysts Are Backing Off Dollar Tree

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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%.

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.