Dollar Tree (DLTR) Q3 Earnings Decline Expected: Time You Buy?

in INVESTING IDEAS by

Dollar Tree, Inc. (NASDAQGS:DLTR) is scheduled to report Q3 earnings results on Tuesday, November 26, 2019, at 9:00 a.m. eastern time. You can find more information about the conference call here.

The company is expected to report earnings of $1.13/share on revenue of $5.748 billion. The consensus earnings per share (EPS) of $1.13/share is based on a poll of 22 analysts and represents a decline of -4.2% over the same quarter last year when the company reported earnings of $1.18/share.

The revenue forecast of $5.748 billion based on a poll of 21 analysts implies a year-over-year (YoY) growth of 3.8%. Last year the company reported $5.539 billion in revenue for the quarter.

Expected to report EPS decline of -$0.05/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $5,748.50 $5,538.80 3.8%
EPS $1.13 $1.18 -4.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, missed 2 quarters, and met expectations 2 quarters. What are your expectations from Dollar Tree for earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.79 $0.76 -3.5% Missed
Q1, 2020 $1.13 $1.14 0.9% Beat
Q4, 2019 $1.92 $1.93 0.5% Beat
Q3, 2019 $1.14 $1.18 3.5% Beat
Q2, 2019 $1.15 $1.15 0.0% Meet
Q1, 2019 $1.23 $1.19 -3.3% Missed
Q4, 2018 $1.89 $1.89 0.0% Meet
Q3, 2018 $0.90 $1.01 12.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending August 3, 2019, the stock price reacted by increasing by 1.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-29 $99.60 $101.53 1.9% Increase
2019-05-30 $95.32 $101.59 6.6% Increase
2019-03-06 $95.47 $103.16 8.1% Increase
2018-11-29 $83.32 $86.77 4.1% Increase

Fundamentals And Technical Analysis

Dollar Tree is currently trading at $112.64/share, up 3.3% for the day. The company is trading at approximately 94.1% of its 52-week high of $119.71/share. The company’s stock price is up 10.9% since the last earnings report and up 3.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 44.69 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of -16.4x and a forward P/E multiple of 21.3x. Dollar Tree’s current share price also implies a price-to-book (P/B) multiple of 4.4x. The following table summarizes some other key fundamental ratios:

Data as of November 25, 2019
Metric Value
Last Fiscal Period FY2020.Q2
Period End Date August 3, 2019
Stock Price (Current) $112.64
P/E Ratio -16.4x
P/E Ratio (Fwd) 21.3x
PEG Ratio 1.4
Total Debt to Capital (%) 28.4%
Levered Free Cash Flow $915.9 million
Enterprise Value / EBITDA 15.7x

Source: Finbox

Company Profile: Dollar Tree, Inc.

Dollar Tree, Inc. is a large-cap stock with a market capitalization of $25.802 billion and a total enterprise value of $35.429 billion. The company operates in the Consumer Discretionary sector and the Multiline Retail industry.

Dollar Tree, Inc. operates discount variety retail stores. It operates through two segments, Dollar Tree and Family Dollar.

The Dollar Tree segment offers merchandise at the fixed price of $1.00. It provides consumable merchandise, including candy and food, and health and beauty care, as well as everyday consumables, such as household paper and chemicals, and frozen and refrigerated food; variety merchandise comprising toys, durable housewares, gifts, stationery, party goods, greeting cards, soft lines, and other items; and seasonal goods that include Valentine’s Day, Easter, Halloween, and Christmas merchandise. This segment operates 7,001 stores under the Dollar Tree and Dollar Tree Canada brands, as well as 12 distribution centers in the United States and 2 in Canada; and a store support center in Chesapeake, Virginia.

The Family Dollar segment operates general merchandise discount retail stores that offer consumable merchandise, which comprise food and beverages, tobacco, health and beauty aids, household chemicals, paper products, hardware, and automotive supplies, diapers, batteries, and pet food and supplies; and home products, including housewares, home décor, and giftware, as well as domestics, such as comforters, sheets, and towels. Its stores also provide apparel and accessories merchandise comprising clothing, fashion accessories, and shoes; and seasonal and electronics merchandise that includes Valentine’s Day, Easter, Halloween, and Christmas merchandise, as well as personal electronics, which comprise pre-paid cellular phones and services, stationery and school supplies, and toys. This segment operates stores under the Family Dollar brand; and 11 distribution centers, as well as a store support center in Matthews, North Carolina.

The company was founded in 1986 and is headquartered in Chesapeake, Virginia.

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