Why This Is Dollar Tree's Strongest Quarter in Years

Dollar Tree Inc. (NASDAQ: DLTR) reported fiscal third-quarter results before markets opened Tuesday. The discount retailer posted $1.39 in earnings per share (EPS) and $6.18 billion in revenue, beating the consensus estimates of $1.15 in EPS on revenue of $6.12 billion. The same period of last year reportedly had EPS of $1.08 and $5.75 billion in revenue.

Management was quick to note that Dollar Tree delivered its strongest same-store sales performance in the past 10 quarters, along with a 50-basis-point improvement in operating margin.

During the latest quarter, enterprise same-store sales increased by 5.1%. Same-store sales for the Dollar Tree segment increased 4.0%, and for the Family Dollar segment they increased by 6.4%.

In terms of segment revenues, Dollar Tree stores had $3.30 billion in revenue, an increase of 7.4% year over year. Family Dollar stores reported $2.87 billion, which was an increase of 7.5% in the same time.

Citing uncertainty regarding COVID-19, the company did not provide any guidance. However, consensus estimates so far are calling for $1.94 in EPS and $6.69 billion in revenue for the fiscal fourth quarter.

On the books, Dollar Tree cash and cash equivalents totaled $1.12 billion at the end of the quarter, up from $539.2 million at the end of the previous fiscal year.

Also in this time, the company as a whole opened 143 new stores, expanded or relocated 34 stores and closed 16 stores.

Dollar Tree stock traded up 11.6% to $108.92 on Tuesday, in a 52-week range of $60.20 to $109.10. The consensus price target is $107.54.