Dollarama (DOL) AI Stock Analysis

• Market Cap: C$50.18B
• Dividend Yield: 0.22%
• Average Volume (3M): 574.93K
• Price to Earnings (P/E): 40.4
• Beta (1Y): 0.46
• Revenue Growth: 9.91%
• EPS Growth: 16.96%
• Country: CA
• Employees: 7,720
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Discount Stores
• EPS (TTM): 1.16
• Shares Outstanding: 274,362,500
• 10 Day Avg. Volume: 466,576
• 30 Day Avg. Volume: 574,928
• PEG Ratio: 1.93
• Price to Book (P/B): 32.39
• Price to Sales (P/S): 6.00
• P/FCF Ratio: 27.54
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$204.89
• Price Target Upside: 12.03% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 71 Outperform
• Price Target: C$201.00 ▲(9.90% Upside)

Dollarama's strong financial performance and positive earnings call outlook are key strengths, supported by robust profitability and strategic international expansion. However, technical indicators suggest potential resistance, and the high P/E ratio indicates valuation concerns. Challenges in seasonal sales and higher costs in new markets also pose risks.

Positive Factors

International Expansion

Dollarama's strategic international expansion into Mexico and Australia positions it for long-term growth by diversifying its market presence and leveraging new opportunities in emerging markets.

Revenue Growth

Strong revenue and earnings growth reflect Dollarama's effective business model and market demand, supporting its ability to sustain profitability and invest in future expansion.

Gross Margin Improvement

Improved gross margins indicate efficient cost management and operational effectiveness, enhancing Dollarama's profitability and competitive edge in the discount retail sector.

Negative Factors

High Debt Levels

High leverage could pose financial risks, limiting Dollarama's flexibility to navigate economic downturns or invest in growth without incurring additional costs.

Decline in Free Cash Flow Growth

A decline in free cash flow growth may impact Dollarama's ability to fund operations and expansion internally, potentially increasing reliance on external financing.

Challenges in Australian Segment

Integration challenges and costs in the Australian segment may delay profitability, affecting Dollarama's short to medium-term financial performance and strategic goals.

Dollarama Business Overview & Revenue Model

Company Description

Dollarama Inc. is a leading Canadian dollar store retailer that operates a chain of discount variety stores across Canada. Established in 1992, the company offers an extensive range of products including household goods, food items, health and beauty products, party supplies, and seasonal items, all at low price points, typically under $4.00. With a commitment to providing value to customers, Dollarama caters to budget-conscious shoppers and is known for its no-frills shopping experience.

How the Company Makes Money

Dollarama 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 Financial Statement Overview

Summary

Dollarama exhibits strong financial performance with robust profitability and efficient operations, as evidenced by its high profit margins and return on equity. While the company maintains a high level of debt, it effectively generates returns on its equity. Cash flow generation remains healthy, although the recent decline in free cash flow growth warrants attention.

Income Statement

Dollarama demonstrates strong profitability with a consistent increase in gross and net profit margins over the years. The TTM gross profit margin stands at 45.32%, and the net profit margin is 18.79%, indicating efficient cost management and strong bottom-line performance. Revenue growth is steady, with a TTM growth rate of 2.46%, reflecting resilience in a competitive market. The EBIT and EBITDA margins are robust at 27.56% and 33.88%, respectively, showcasing operational efficiency.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 3.56 in the TTM, indicating significant leverage, which could pose a risk if not managed carefully. However, the return on equity is impressive at 99.03%, suggesting that the company is effectively using its equity base to generate profits. The equity ratio is relatively low, highlighting a reliance on debt financing.

Cash Flow

Cash flow analysis shows a decline in free cash flow growth at -23.4% in the TTM, which could be a concern if it persists. However, the operating cash flow to net income ratio is strong at 1.76, indicating healthy cash generation relative to net income. The free cash flow to net income ratio is also solid at 0.85, suggesting that a significant portion of earnings is converted into free cash flow.

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	3.14B	2.89B	2.61B	2.35B	2.05B	1.91B
EBITDA	1.92B	1.70B	1.52B	1.24B	1.07B	999.30M
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	4.22B	3.62B	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	1.36B	1.33B	1.18B	670.81M	929.11M	749.04M
Operating Cash Flow	1.58B	1.54B	1.43B	804.86M	1.07B	889.08M
Investing Cash Flow	-410.05M	-224.14M	-250.87M	-156.55M	-158.67M	-264.52M
Financing Cash Flow	-755.28M	-1.51B	-966.62M	-618.11M	-1.28B	-275.88M

Dollarama Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 182.89
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:DOL, the sentiment is Neutral. The current price of 182.89 is above the 20-day moving average (MA) of 180.91, below the 50-day MA of 185.77, and above the 200-day MA of 171.08, indicating a neutral trend. The MACD of -0.17 indicates Negative momentum. The RSI at 49.60 is Neutral, neither overbought nor oversold. The STOCH value of 75.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:DOL.

Dollarama Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATZ	―	C$11.17B	38.99	26.49%	―	26.51%	172.52%
CTC.A	―	$9.57B	12.62	13.84%	4.15%	0.05%	99.91%
DOL	―	C$50.18B	40.38	94.57%	0.22%	9.91%	16.96%
LNF	―	C$1.97B	12.24	14.38%	2.88%	0.57%	8.54%
CTC	―	$9.55B	18.80	13.84%	2.87%	0.05%	99.91%
Sector *	―	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
PET	―	C$2.46B	26.48	126.66%	1.30%	5.18%	17.66%

Dollarama Corporate Events

Dollarama’s Earnings Call: Growth Amid Challenges

Dollarama’s recent earnings call conveyed a generally positive sentiment, highlighting the company’s robust international expansion and strong revenue growth. However, challenges were noted, particularly with flat seasonal sales and increased costs tied to new operations in Australia. Despite these hurdles, Dollarama’s core Canadian business remains strong and continues to expand.

Dollarama Reports Strong Q2 2026 Results Amid Global Expansion

Dollarama Inc., a prominent Canadian value retailer, operates over 2,700 stores across seven countries, offering a wide range of affordable everyday and seasonal merchandise. The company has a significant presence in Canada, Australia, and Latin America through its subsidiary, Dollarcity.

Dollarama’s Q2 Fiscal 2026 Results Highlight International Expansion and Strong Sales Growth

Dollarama reported a strong financial performance for the second quarter of fiscal 2026, with a 10.3% increase in sales to $1,723.8 million and a 12.4% rise in net earnings to $321.5 million. The acquisition of The Reject Shop Limited in Australia and the opening of Dollarcity’s first store in Mexico mark significant milestones in Dollarama’s international expansion strategy, enhancing its growth prospects and market diversification.

The most recent analyst rating on (TSE:DOL) stock is a Buy with a C$212.00 price target. To see the full list of analyst forecasts on Dollarama stock, see the TSE:DOL Stock Forecast page.