Dollarama (DOL) AI Stock Analysis

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Dollarama

(TSX:DOL)

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Outperform 70 (OpenAI - 4o)

Rating:70Outperform

Price Target:

C$206.00

▲(8.96% Upside)

Dollarama's strong financial performance and positive earnings call outlook are the most significant factors contributing to its score. However, the high P/E ratio and mixed technical indicators suggest caution. The company's strategic international expansion and robust Canadian operations provide a solid growth foundation, but the high debt level and challenges in the Australian segment warrant attention.

Positive Factors

Negative Factors

Dollarama (DOL) vs. iShares MSCI Canada ETF (EWC)

Market Cap

$52.54B

Dividend Yield0.21%

Average Volume (3M)551.15K

Price to Earnings (P/E)42.0

Beta (1Y)0.51

Revenue Growth9.91%

EPS Growth16.96%

CountryCA

Employees7,720

SectorConsumer Defensive

Sector Strength42

IndustryDiscount Stores

Share Statistics

EPS (TTM)1.16

Shares Outstanding276,385,000

10 Day Avg. Volume499,956

30 Day Avg. Volume551,146

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.10

Enterprise Value/Revenue8.62

Enterprise Value/Gross Profit18.99

Enterprise Value/Ebitda25.26

Forecast

1Y Price Target

$204.38

Price Target Upside8.10% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering9

Dollarama Business Overview & Revenue Model

Company DescriptionDollarama Inc. operates a chain of dollar stores in Canada. Its stores offer general merchandise, consumables, and seasonal products. The company also sells its products through online store. As of January 30, 2022, it operated 1,421 stores. The company was formerly known as Dollarama Capital Corporation and changed its name to Dollarama Inc. in September 2009. Dollarama Inc. was founded in 1992 and is headquartered in Montreal, Canada.

How the Company Makes MoneyDollarama generates revenue primarily through the sale of a wide assortment of products at fixed low prices. The company's revenue model is based on high-volume sales, low operating costs, and a carefully managed supply chain. Key revenue streams include in-store sales from its extensive product range and seasonal merchandise. Dollarama also benefits from private label products, which help to enhance profit margins. The company maintains strong relationships with suppliers to negotiate favorable pricing, enabling it to keep costs low. Significant factors contributing to its earnings include its widespread store presence across Canada, a growing customer base, and the strategic expansion of its product offerings to meet diverse consumer needs.

Dollarama Earnings Call Summary

Earnings Call Date:Aug 27, 2025

(Q2-2026)

% Change Since: |

Next Earnings Date:Dec 03, 2025

Earnings Call Sentiment Positive

The earnings call presents a positive outlook with significant international expansion and strong revenue growth. However, there are challenges with flat seasonal sales and higher costs associated with the new Australian operations. The company's core Canadian business remains strong and continues to expand.

Q2-2026 Updates

Positive Updates

International Expansion Achievements

Dollarama opened Dollarcity's first store in Mexico and completed the acquisition of Australia's largest discount retailer, adding 5,000 new colleagues.

Strong Same-Store Sales Growth in Canada

Same-store sales in Canada grew by 4.9%, driven by a 3.9% increase in the number of transactions and a 0.9% increase in average transaction size.

Revenue and Earnings Growth

Sales increased by 10.3% to over $1.7 billion, and net earnings increased by 12.5% to $321.5 million, with diluted EPS rising by 13.7% to $1.16.

Gross Margin Improvement

Consolidated Q2 gross margin was 45.5%, up from 45.2% last year, primarily due to lower logistics costs.

Canadian Store Expansion

Opened 27 net new stores in Q2, bringing the total number to 1,665 locations in Canada, with a target of 70 to 80 net new store openings for the fiscal year.

Negative Updates

Challenges in Seasonal and Discretionary Spending

Seasonal sales remained flat, with inconsistent consumer behavior noted, reflecting fragility in discretionary spending in Canada.

Higher SG&A Costs

SG&A increased to 14% of sales, up from 13.6% last year, driven by higher labor costs in the Australian segment and a 20 basis point impact from a onetime transaction cost.

No Immediate Profit Contribution from Australia

The Australian segment is not expected to contribute to profitability in fiscal 2026 due to integration costs and a multiyear transformation plan.

Company Guidance

During Dollarama's Second Quarter Fiscal 2026 Results Conference Call, the company provided several key metrics and strategic updates. Dollarama reported a 10.3% increase in sales compared to the same period last year, reaching over $1.7 billion, driven by a 4.9% increase in same-store sales in Canada and contributions from new store openings. The gross margin for the quarter was 45.5%, slightly up from 45.2% the previous year, primarily due to lower logistics costs. The company opened 27 net new stores in Q2, bringing the total to 1,665 locations in Canada, with a target of 70 to 80 net new store openings by year-end. Dollarama's international expansion included the opening of the first Dollarcity store in Mexico and the acquisition of Australia's largest discount retailer, The Reject Shop (TRS). The TRS acquisition includes 395 locations, with a long-term target of 700 stores in Australia by 2034. The company plans to gradually integrate Dollarama products and store layouts into TRS, with full conversion expected by the end of fiscal 2027. Dollarama's Canadian segment continues to show strong performance, and the company remains focused on providing value to consumers amid economic uncertainties.

Dollarama Financial Statement Overview

Summary

Dollarama demonstrates strong financial performance with robust revenue growth, profitability, and cash flow generation. The high return on equity is a significant strength, although the high debt-to-equity ratio poses some risk. Overall, the company's financials are solid, supporting its growth trajectory.

Income Statement

Very Positive

Dollarama shows strong financial performance with consistent revenue growth and solid profitability. The TTM (Trailing-Twelve-Months) gross profit margin is 45.3%, and the net profit margin is 18.8%. Revenue grew by 10.1% from 2024 to 2025, indicating a positive growth trajectory. The EBIT and EBITDA margins are robust at 27.2% and 33.9% respectively, highlighting operational efficiency. Overall, Dollarama's income statement reflects a healthy business with strong growth and profitability.

Balance Sheet

Positive

The balance sheet reveals a high debt-to-equity ratio of 3.56, indicating significant leverage which could pose risks during economic downturns. However, the return on equity is impressive at 92.9% for TTM, driven by high net income. The equity ratio stands at 20.1%, suggesting moderate financial stability. While the company effectively utilizes its equity to generate returns, the high leverage warrants careful monitoring.

Cash Flow

Positive

Dollarama's cash flow statement showcases strong cash generation capabilities. The operating cash flow to net income ratio of 1.37 indicates efficient cash conversion. Free cash flow grew by 10.5% from 2024 to 2025, reflecting effective cash management. The free cash flow to net income ratio is 1.16, underscoring the company's ability to generate cash relative to its net earnings. Overall, Dollarama's cash flow situation is strong, supporting its growth and debt service.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.69B	6.41B	5.87B	5.05B	4.33B	4.03B
Gross Profit	3.04B	2.89B	2.61B	2.20B	1.90B	1.77B
EBITDA	2.28B	2.15B	1.81B	1.48B	1.25B	1.11B
Net Income	1.26B	1.17B	1.01B	801.86M	663.17M	564.35M
Balance Sheet
Total Assets	7.68B	6.48B	5.26B	4.82B	4.06B	4.22B
Cash, Cash Equivalents and Short-Term Investments	687.23M	122.69M	313.92M	101.26M	71.06M	439.14M
Total Debt	5.56B	4.71B	4.33B	4.21B	3.61B	3.46B
Total Liabilities	6.23B	5.29B	4.88B	4.79B	4.13B	3.89B
Stockholders Equity	1.46B	1.19B	380.85M	28.41M	-66.03M	334.85M
Cash Flow
Free Cash Flow	1.42B	1.40B	1.25B	712.22M	906.37M	721.25M
Operating Cash Flow	1.68B	1.64B	1.53B	869.04M	1.07B	889.08M
Investing Cash Flow	-410.05M	-224.14M	-250.87M	-156.55M	-158.67M	-264.52M
Financing Cash Flow	-856.89M	-1.61B	-966.62M	-682.29M	-1.28B	-275.88M

Dollarama Technical Analysis

Technical Analysis Sentiment

Positive

Last Price189.06

Price Trends

50DMA

189.95

Negative

100DMA

184.49

Positive

200DMA

165.35

Positive

Market Momentum

MACD

-0.43

Positive

RSI

48.68

Neutral

STOCH

46.61

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:DOL, the sentiment is Positive. The current price of 189.06 is below the 20-day moving average (MA) of 189.59, below the 50-day MA of 189.95, and above the 200-day MA of 165.35, indicating a neutral trend. The MACD of -0.43 indicates Positive momentum. The RSI at 48.68 is Neutral, neither overbought nor oversold. The STOCH value of 46.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:DOL.

Dollarama Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATZ	80 Outperform	8.25B	41.74	20.76%	―	22.57%	197.68%
LNF	75 Outperform	2.03B	12.22	13.68%	2.83%	0.57%	8.54%
CTC.A	73 Outperform	9.42B	12.28	14.42%	4.20%	0.05%	99.91%
PET	72 Outperform	2.57B	28.08	166.31%	1.25%	5.18%	17.66%
DOL	70 Outperform	$52.54B	41.97	94.57%	0.21%	9.91%	16.96%
CTC	68 Neutral	9.42B	18.51	14.42%	2.79%	0.05%	99.91%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%

* Consumer Defensive Sector Average

Performance Comparison

TSE:DOL

Dollarama

189.06

54.97

40.99%

TSE:LNF

Leon's Furniture

29.70

0.95

3.30%

CDNTF

Canadian Tire

185.17

22.73

13.99%

ATZAF

Aritzia

62.57

28.28

82.47%

CDNAF

Canadian Tire

122.63

11.16

10.01%

TSE:PET

Pet Valu Holdings Ltd.

37.70

12.02

46.81%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Sep 18, 2025