Is Dollar Tree a Bargain After Q4 Results?

Chris Lange

Dollar Tree Inc. (NYSE: DLTR) reported its most recent quarterly results before the markets opened on Wednesday. The discount retailer posted $1.93 in earnings per share (EPS) and $6.21 billion in revenue, almost in line with the consensus estimates of $1.93 in EPS on revenue of $6.19 billion. The same period of last year reportedly had EPS of $1.89 and $6.36 billion in revenue.

During the latest quarter, enterprise same-store sales increased by 2.4%. At the same time, same-store sales for the Dollar Tree banner increased 3.2% on a constant currency basis (or 3.1% when adjusted to include the impact of Canadian currency fluctuations). Same-store sales for the Family Dollar banner increased 1.4%.

Overall, the chain opened 143 stores, and closed 84 Family Dollar stores and 10 Dollar Tree stores. Additionally, the firm opened five Dollar Tree stores that were re-bannered from Family Dollar. Retail selling square footage at quarter end was approximately 120.1 million square feet.

Looking ahead to the fiscal first quarter, Dollar Tree expects to see EPS in the range of $1.05 to $1.15 and revenue between $5.74 billion and $5.85 billion. But consensus estimates so far are calling for $1.30 in EPS and $5.81 billion in revenue.

Gary Philbin, president and CEO, commented:

Sales for the quarter were strong. Our results demonstrate the increasing strength of the Dollar Tree brand, and accelerated progress on the Family Dollar turnaround, as Family Dollar delivered its strongest quarterly same-store sales growth of the year.

Shares of Dollar Tree closed Tuesday at $95.47, in a 52-week range of $78.78 to $101.75. The consensus price target is $102.54. Following the announcement, the stock was up over 6% at $101.75 in early trading indications Wednesday.