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Dollar Tree (DLTR)
:DLTR
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Dollar Tree
(NASDAQ:DLTR)56Neutral
Positive Factors
Earnings
Selling Family Dollar could lead to a significant upside for Dollar Tree, with estimates suggesting a 32% increase in value.
Strategic Moves
Potential buyers, including Apollo Global Management and Sycamore Partners, have shown interest in Family Dollar, which suggests possible strategic moves for Dollar Tree.
Negative Factors
Profitability
If Dollar Tree fails to find a buyer for Family Dollar, it could negatively impact the company's profitability, leading to mid- to high-teens percentage downside.
Dollar Tree (DLTR) vs. S&P 500 (SPY)
Market Cap
$14.34B
Dividend YieldN/A
Average Volume (3M)2.97M
Price to Earnings (P/E)―
Beta (1Y)0.75
Revenue Growth5.19%
EPS Growth-190.36%
CountryUS
Employees211,826
SectorConsumer Cyclical
Sector Strength53
IndustryRetailers - Staples
Share Statistics
EPS (TTM)-4.77
Shares Outstanding215,038,640
10 Day Avg. Volume3,775,380
30 Day Avg. Volume2,965,918
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.47
Price to Cash Flow (P/CF)4.70
P/FCF Ratio10.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$83.33Price Target Upside24.97% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
Dollar Tree Business Overview & Revenue Model
Company DescriptionDollar Tree, Inc. (DLTR) is an American multi-price-point discount variety store chain. Headquartered in Chesapeake, Virginia, the company operates thousands of stores across the United States and Canada under the Dollar Tree and Family Dollar brands. Dollar Tree offers a wide assortment of consumer goods, including household items, cleaning supplies, food and beverages, health and beauty products, stationery, and seasonal items, primarily priced at $1 or in the low-cost range.
How the Company Makes MoneyDollar Tree makes money primarily through the sale of consumer goods at its retail locations. The company's revenue model is based on high-volume sales of low-cost items, leveraging economies of scale to maintain profitability. Key revenue streams include the direct sale of merchandise in its Dollar Tree and Family Dollar stores. Additionally, the company benefits from strategic purchasing agreements and supply chain efficiencies that allow it to offer competitive pricing. Dollar Tree's revenue is also influenced by its ability to adapt its product mix to meet consumer demand and by maintaining a broad geographic presence, which helps to mitigate regional economic fluctuations.
Dollar Tree Financial Statement Overview
Summary
Dollar Tree demonstrates growth in revenue and strong cash flow generation, but profitability challenges are evident with declining net income and negative margins. While the balance sheet shows reduced leverage, equity stability is weakened. Overall, the company needs to address operational inefficiencies to improve profitability and financial health.Income Statement
Dollar Tree's revenue shows growth with a 10.08% increase from the previous year to the TTM period. However, profitability metrics are concerning, with a significant decline in net income, leading to a negative net profit margin of -3.35% in the TTM. The EBIT margin also turned negative, indicating operational challenges. The gross profit margin remains stable at around 31%.45
Neutral
Balance Sheet
The company's debt-to-equity ratio improved slightly from 1.42 to 1.06 in the TTM, indicating a reduction in leverage. However, equity ratio decreased from 38.01% to 32.72%, reflecting lower financial stability. The return on equity turned negative due to net losses, highlighting profitability concerns despite a strong asset base.55
Neutral
Cash Flow
Operating cash flow improved by 13.37% in the TTM, showcasing strong cash generation capabilities. Free cash flow growth was significant at 48.37%, indicating efficient capital management. The operating cash flow to net income ratio is robust, but the negative net income impacts the free cash flow to net income ratio, reflecting underlying profitability issues.60
Neutral
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 31.22B | 30.60B | 28.33B | 26.32B | 25.51B | 23.61B | Gross Profit |
| 9.70B | 9.33B | 8.94B | 7.74B | 7.79B | 7.04B | EBIT |
| 135.10M | -881.80M | 2.24B | 1.81B | 1.89B | 1.26B | EBITDA |
| -227.00M | -40.90M | 3.00B | 2.52B | 2.57B | 1.90B | Net Income Common Stockholders |
| -1.04B | -998.40M | 1.62B | 1.33B | 1.34B | 827.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 684.90M | 684.90M | 642.80M | 984.90M | 1.42B | 539.20M | Total Assets |
| 22.02B | 22.02B | 23.02B | 21.72B | 20.70B | 19.57B | Total Debt |
| 10.39B | 10.39B | 10.13B | 9.97B | 9.64B | 10.03B | Net Debt |
| 9.70B | 9.70B | 9.48B | 8.99B | 8.22B | 9.49B | Total Liabilities |
| 14.71B | 14.71B | 14.27B | 14.00B | 13.41B | 13.32B | Stockholders Equity |
| 7.31B | 7.31B | 8.75B | 7.72B | 7.29B | 6.25B |
| Cash Flow | Free Cash Flow | ||||
| 855.60M | 576.90M | 361.00M | 408.70M | 1.82B | 833.10M | Operating Cash Flow |
| 3.04B | 2.68B | 1.61B | 1.43B | 2.72B | 1.87B | Investing Cash Flow |
| -2.14B | -2.11B | -1.25B | -1.02B | -889.70M | -1.02B | Financing Cash Flow |
| -641.00M | -530.00M | -686.80M | -836.50M | -949.90M | -709.80M |
Dollar Tree Technical Analysis
Negative
66.68
Price Trends
73.20
Negative
70.44
Negative
83.48
Negative
Market Momentum
-0.62
Positive
32.66
Neutral
14.56
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLTR, the sentiment is Negative. The current price of 66.68 is below the 20-day moving average (MA) of 73.28, below the 50-day MA of 73.20, and below the 200-day MA of 83.48, indicating a bearish trend. The MACD of -0.62 indicates Positive momentum. The RSI at 32.66 is Neutral, neither overbought nor oversold. The STOCH value of 14.56 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DLTR.
Dollar Tree Risk Analysis
Dollar Tree disclosed 24 risk factors in its most recent earnings report. Dollar Tree reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Dollar Tree Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $4.78B | 17.36 | 16.61% | ― | 14.32% | 0.02% | |
72 Outperform | $14.62B | 31.54 | 17.02% | ― | 12.18% | 60.91% | |
72 Outperform | $6.34B | 30.85 | 12.84% | ― | 12.48% | 32.49% | |
70 Outperform | $53.67B | 12.41 | 30.16% | 3.69% | 0.64% | 20.16% | |
68 Neutral | $15.81B | 11.84 | 18.19% | 3.28% | 2.90% | -30.27% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
56 Neutral | $14.34B | ― | -13.67% | ― | 5.19% | -190.36% |
* Consumer Cyclical Sector Average
Performance Comparison
DLTR
Dollar Tree
66.68
-82.40
-55.27%
DG
Dollar General
72.92
-78.40
-51.81%
TGT
Target
117.14
-46.40
-28.37%
FIVE
Five Below
82.70
-122.22
-59.64%
BURL
Burlington Stores
230.27
18.16
8.56%
OLLI
Ollie's Bargain Outlet Holding
103.39
27.22
35.74%
Dollar Tree Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -12.52% | Next Earnings Date: May 22, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong customer growth, market share gains, and successful strategic initiatives at Dollar Tree, but also noted significant challenges at Family Dollar due to inflation, reduced government benefits, and increased costs. Despite these challenges, the company is optimistic about its transformation journey and future growth prospects.Highlights
Record Customer Growth
Dollar Tree added 4.3 million new customers and Family Dollar added 2.3 million new customers over the past year, with a significant contribution from households with incomes over $125,000.
Strong Sales and Market Share Gains
Consolidated net sales increased by 5.4% to $7.3 billion, with a comp growth of 3.9%. Dollar Tree gained 30 basis points of consumables market share.
Progress in Multi-Price Strategy
The Dollar Tree Plus assortment is now in 4,500 stores, with plans to expand to 4,900 by year-end. Dollar Tree's frozen and refrigerated assortments are in 6,500 stores.
Successful Hiring Initiative
National Hiring Day resulted in nearly 14,000 part-time associates hired, a record for the event.
Improvement in Gross Profit
Gross profit dollars increased by 5% compared to the previous year.
Lowlights
Family Dollar Performance Challenges
Family Dollar's comp was up only 2%, with a significant 12.5% decline in discretionary categories like home decor, electronics, and toys.
Impact of Inflation and Reduced SNAP Benefits
Lower-income consumers were affected by inflation and a 23% year-over-year reduction in SNAP benefits, impacting Family Dollar's performance.
Shrink and Cost Pressures
Operating income declined by 20.9%, with operating margin contracting by 140 basis points due to higher shrink, unfavorable product mix, and increased distribution costs.
Unexpected Costs from Product Recall
EPS was negatively impacted by $0.05 due to the OTC product recall.
Company Guidance
During the Dollar Tree third quarter 2023 earnings call, the company provided guidance that included several key metrics. The company reported a consolidated net sales increase of 5.4% to $7.3 billion, with a comp growth of 3.9% driven by a 4.7% increase in traffic, despite a slight decrease in the average ticket of less than 1%. The Dollar Tree segment saw a comp increase of 5.4%, with traffic up 7% and an average ticket decline of 1.5%, while Family Dollar's comp grew by 2%, with traffic up 1.4% and average ticket up 0.7%. For the fourth quarter, the company expects net sales to range from $8.6 billion to $8.8 billion, based on a low single-digit comp increase for the enterprise, including a mid-single-digit increase at Dollar Tree and a range of minus 1% to plus 1% at Family Dollar. The full-year guidance was tightened, projecting GAAP EPS between $5.81 and $6.01, with capital expenditures expected to total approximately $2 billion. The company also highlighted ongoing transformation initiatives, including merchandise, IT, and supply chain improvements, with a focus on enhancing customer value propositions and optimizing the Family Dollar store portfolio.Dollar Tree Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Dollar Tree Expands Board with Key Appointments
Positive
Feb 28, 2025
On February 27, 2025, Dollar Tree, Inc. appointed Michael C. Creedon, Jr., William W. Douglas III, and Timothy A. Johnson to its Board of Directors, with Creedon also serving as CEO since December 2024. The board’s expansion from nine to twelve members aims to bolster the company’s growth strategy in the competitive retail landscape. Douglas and Johnson bring extensive retail and financial leadership experience, enhancing the board’s capabilities to drive long-term value for stakeholders.
Executive/Board Changes
Dollar Tree Revises CEO Compensation Package for 2025
Neutral
Jan 21, 2025
Dollar Tree, Inc. announced that on January 16, 2025, it approved changes to the compensation package for its Chief Executive Officer, Michael C. Creedon, Jr. This decision aligns with his elevation to CEO, with a revised agreement that includes an increased base salary and an enhanced target for his annual incentive opportunity. Furthermore, Mr. Creedon is expected to receive long-term incentive awards valued at $9,000,000 in fiscal year 2025, reflecting the company’s executive compensation strategy.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.