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What to Expect from Dollar Tree’s 3Q16 Results

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Dollar Tree will report its 3Q16 results

Dollar Tree (DLTR), a leading operator of discount stores in the US, will release its results for 3Q16 on November 22, 2016. The results relate to the three-month period ending October 2016.

The company’s second quarter revenue and earnings fell short of Wall Street analysts’ estimates. The earnings per share stood at $0.72. It missed the estimates by $0.01. The total revenue rose 66% YoY (year-over-year) to $5 billion. However, it fell short of Wall Street analysts’ estimates by $90 million.

For 3Q16, Dollar Tree’s earnings are expected to grow 59% YoY to $0.78. The total sales are expected to rise 2.7% to $5 billion.

 

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About Dollar Tree

Founded in 1986, Dollar Tree operates around 14,000 discount stores in the US and Canada under the Dollar Tree and Family Dollar brands.

The Dollar Tree stores offer merchandise, everyday consumables, food, health, and beauty care products for a fixed price of $1.

The Family Dollar segment provides food, tobacco, home products, apparel and accessories, and personal electronics.

Investors looking for exposure to Dollar Tree through ETFs can consider the iShares Morningstar Mid-Cap Growth ETF (JKH). JKH invests 1.3% of its total holdings in the company.

Valuations update and stock recommendation

Currently, Dollar Tree is trading at a one-year forward price-to-earnings ratio of 18x. The company is trading at a premium to competitor Dollar General (DG), which is valued at about 15.8x. TJX Companies (TJX) and PriceSmart (PSMT) are more expensive compared to Dollar Tree. They’re trading at 20.3x and 24.2x as of November 17, 2016.

The average 12-month price target by 26 analysts covering Dollar Tree is $91.25. It indicates an upside of ~12% over the next year.

What’s the series all about?

In this series, we’ll provide a preview of Dollar Tree’s 3Q16 results. We’ll discuss the company’s 2Q16 results with a view on its expected performance in the next quarter. Also, we’ll briefly touch on the company’s current valuation, its stock market performance, and Wall Street analysts’ recommendations on the company.

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