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3Q17 Earnings Preview: What’s in Store for Dollar Tree?

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Part 5
3Q17 Earnings Preview: What’s in Store for Dollar Tree? PART 5 OF 5

What Does Wall Street Think of Dollar Tree?

Recent analyst actions on Dollar Tree

Dollar Tree (DLTR) is covered by 26 Wall Street analysts who, together, rate the company a 2.1 on a scale of 1 (strong buy) to 5 (strong sell).

The discount retailer’s ratings have improved over the last three months. The company was rated a 2.4 in August. Ratings improved after Raymond James and Bernstein upgraded the company to a “buy” rating following better-than-expected Q2 results.

However, not all analysts are turning positive on Dollar Tree. Loop Capital analyst Anthony Chukumba downgraded the company from a “buy” to a “hold” rating in October, citing valuations as the key reason. However, he reaffirmed his faith in the company’s business model and said, “We continue to believe Dollar Tree management will generate shareholder value from Family Dollar ‘one way or another’—either in the form of improved financial performance or through a sale.”

What Does Wall Street Think of Dollar Tree?

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Wall Street recommendations

Of the analysts who cover DLTR, 58% recommend buying the stock. Raymond James, Wells Fargo, and Bernstein are among them. 42% support holding the stock while there are no “sell” ratings on the company. DLTR has a better rating than Dollar General (DG), which is rated a 2.5. The company has received 43% “buy,” 50% “hold,” and 7% “sell” recommendations.

Target price and potential upside

Dollar Tree is currently trading at $93.69—close to its 52-week high price. Wall Street sees a 2% upside to the company’s current stock price and has projected an average price target of $95.12 for the company.

Dollar General is also trading close to its 52-week high price. However, the company has a downside of 1% from its current market price of $83.09.

Investors looking for exposure to Dollar Tree through ETFs can consider the SPDR S&P Retail ETF (XRT), which invests 1.3% of its total holdings in the company.

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