Dollarama (TSX:DOL): Examining Valuation After Shares Move Above 200-Day Moving Average

Dollarama (TSX:DOL) has caught the market’s eye as its stock recently crossed above the two hundred day moving average. This technical milestone is sparking new discussions about the stock’s latest trend.

See our latest analysis for Dollarama.

Dollarama’s momentum has really picked up over the year, with a year-to-date share price return of 41% and a stellar 1-year total shareholder return of 36.19%. The latest move above its two hundred day moving average comes after steady gains and highlights growing optimism among investors, even as there has been no major headline event.

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This steady rally has left investors wondering whether Dollarama is still trading below its true value or if the company’s growth prospects are already reflected in the current share price. Is there a genuine buying opportunity, or has the market priced in future gains?

Most Popular Narrative: Fairly Valued

With Dollarama’s fair value set at CA$198.81 and the last close at CA$197.68, the current share price lines up closely with the narrative estimate. This suggests that consensus views the stock as roughly in line with fundamentals.

The company’s aggressive international expansion, including opening Dollarcity’s first store in Mexico and acquiring Australia’s largest discount retailer, unlocks new, large addressable markets. This positions Dollarama for multi-year top-line revenue growth through broader geographic and demographic exposure.

Read the complete narrative.

Curious about what numbers make this stock’s premium seem worth it? Find out which future earnings leaps, shrinking margins, and bold expansion forecasts are shaping this fair value. The details behind this consensus might surprise you.

Result: Fair Value of $198.81 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, execution risks from rapid overseas expansion and potential margin pressure from higher international costs could present challenges to the current fair value outlook.

Find out about the key risks to this Dollarama narrative.

Another View: What Multiples Reveal

Taking a look beyond fair value estimates, Dollarama’s price-to-earnings ratio sits at 42.9x. This level is not just above its industry peers (19x to 20.2x), but also well above its own fair ratio of 29.4x. This sharp premium suggests investors expect exceptional future growth and stability. But what happens if that optimism fades?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Dollarama Narrative

If you see something different in the data, or want to dive in yourself, you can build your own Dollarama story in just minutes, your way. Do it your way

A great starting point for your Dollarama research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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