DLTR Stock Overview
Dollar Tree, Inc. operates discount variety retail stores.
Dollar Tree Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$156.25|
|52 Week High||US$177.19|
|52 Week Low||US$84.26|
|1 Month Change||-5.31%|
|3 Month Change||-2.44%|
|1 Year Change||57.03%|
|3 Year Change||42.36%|
|5 Year Change||129.07%|
|Change since IPO||13,268.87%|
Recent News & Updates
Dollar Tree Is Too Expensive
Dollar Tree has a strong track record of outperforming the broader market during times of low consumer confidence. On the other hand, the stock appears to be trading at a significant premium compared to the consumer discretionary sector median. While discount stores are well-positioned in times of low consumer confidence, and the firm has reported strong first quarter results, macroeconomic headwinds are likely to impact DLTR in the near-term. DLTR does not pay a dividend. Due to the high price multiples, we believe the stock is a sell at the current valuation. Dollar Tree's (DLTR) stock price has increased by about 11%, despite the relatively high volatility, compared to the 20% decline of the broader market year to date. Data by YCharts Although DLTR has a strong track record of outperforming the broader market in times of low consumer confidence, in our opinion the stock is significantly overvalued at the current price level. In light of the current macroeconomic environment, and the high valuation, we believe that Dollar Tree's stock is a sell now. In this article, we will dig deeper into why DLTR could be an attractive addition to your portfolio in times of low consumer confidence, and why we still believe that the valuation is too high. Let us start with taking a look at the U.S. consumer confidence. Consumer Confidence Consumer confidence is often used as a leading economic indicator, as it can signal potential trend changes in consumer spending in the near term. Therefore, it could be used to gauge, where we are in the current business cycle and form expectations about the spending behavior in the near future. U.S. Consumer confidence (Tradingeconomics.com) The U.S. consumer confidence has been declining steadily in the past months, declining to levels even lower than observed during the financial crisis in 2008-2009. Although consumer spending has remained strong in 2022, we expect the low consumer confidence to have severe implications in the near future. Low consumer confidence is likely to lead to a change in the consumer spending behavior. This change is likely to impact firms, which are selling durable goods first. Customers typically tend to cut or delay the purchase of durable goods, when confidence is low. After durable goods, non-essential, consumer discretionary products are impacted and last the services. Firms in the consumer staples sector are likely to remain relatively unaffected, as they are selling essential goods. Although DLTR is in the consumer discretionary sector because it sells a wide variety of products, discount retailers are actually positioned favorably during such times. This is because consumers are looking to reduce their spending, and they often switch to lower cost alternatives in cheaper stores. One of these lower cost alternatives could be Dollar Tree. Let us actually take a look at, Dollar Tree's stock price development during times of low consumer confidence in the last 20 years. 2001-2002 Data by YCharts In this 2-year time period, despite the high volatility of DLTR's stock price, it significantly outperformed the overall market. While DLTR remained flat, the broader market (SPY) has declined by as much as 33%. 2007-2010 Data by YCharts Between 2007 and 2010, DLTR's outperformance was even more impressive. While SPY has lost about 21%, Dollar Tree's share price has surged by more than 60%. 2011-2012 Data by YCharts While in this time frame, both DLTR and SPY have produced positive returns, once again DLT has substantially outperformed the market. Although past performance is not always a good indicator of the future performance, we believe that in the current low consumer confidence environment, the firm is well-situated to outperform the broader market. Even though we like the stock from this perspective, we believe that the macroeconomic headwinds are likely to create significant downward pressure on the firm's margins and earnings. Due to the high uncertainty with regard to commodity prices, transportation costs, supply chain disruptions and tight labor market, we expect the firm to face substantial challenges in the near term. Valuation DLTR's stock appears to be trading at a significant premium compared to the consumer discretionary sector median. The firm's P/E Non-GAAP ((FWD)) is 18.8x, compared with the sector median of 11.1x. This indicates a premium of about 70%. In terms of EV/EBITDA and P/CF, a similar trend can be observed. In our opinion, such an overvaluation is not justified, despite the strong financial performance in the first quarter. During the first quarter, DLTR has managed to open a significant amount of new stores and expand some of its already existing locations. The firm has also expanded its operating margin, despite the macroeconomic headwinds, and achieved record diluted earnings per share for the first quarter. We expect the demand for DLTR's products to remain high and even increase in the near term. However, in our opinion the margins are likely to decline due to the elevated energy prices, increased freight costs, supply chain disruptions and the tight labor market. Many firms in the first quarter have struggled with these macroeconomic headwinds, including other larger retailers. We expect that DLTR will face the same problems. Further, DLTR does not pay dividends, which make the stock an unattractive choice for many investors, who are looking for regular quarterly income in the volatile market environment. Last, but not least, Dollar Tree also has not returned any value to its shareholders by reducing the number of outstanding shares in the last decade. Shares outstanding (Seekingalpha.com) Although DLTR has not diluted its shareholders by issuing even more shares, we prefer to invest in firms, which have a strong track record of consistent share buyback programs. Before concluding, we also have to point out the recent announcement for leadership change in the company. The change of CFO and COO could also have implications for the performance of the firm in the near term.
Dollar Tree, Inc. (NASDAQ:DLTR) Shares Could Be 31% Below Their Intrinsic Value Estimate
Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Dollar Tree, Inc...
|DLTR||US Multiline Retail||US Market|
Return vs Industry: DLTR exceeded the US Multiline Retail industry which returned -16.8% over the past year.
Return vs Market: DLTR exceeded the US Market which returned -20.4% over the past year.
|DLTR Average Weekly Movement||8.5%|
|Multiline Retail Industry Average Movement||10.0%|
|Market Average Movement||8.1%|
|10% most volatile stocks in US Market||16.8%|
|10% least volatile stocks in US Market||3.2%|
Stable Share Price: DLTR is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 8% a week.
Volatility Over Time: DLTR's weekly volatility (8%) has been stable over the past year.
About the Company
Dollar Tree, Inc. operates discount variety retail stores. It operates in two segments, Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at the fixed price of $ 1.25.
Dollar Tree Fundamentals Summary
|DLTR fundamental statistics|
Is DLTR overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|DLTR income statement (TTM)|
|Cost of Revenue||US$18.62b|
Last Reported Earnings
Apr 30, 2022
Next Earnings Date
Aug 25, 2022
|Earnings per share (EPS)||6.63|
|Net Profit Margin||5.57%|
How did DLTR perform over the long term?See historical performance and comparison
Is DLTR undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 2/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for DLTR?
Other financial metrics that can be useful for relative valuation.
|What is DLTR's n/a Ratio?|
Price to Earnings Ratio vs Peers
How does DLTR's PE Ratio compare to its peers?
|DLTR PE Ratio vs Peers|
|Company||PE||Estimated Growth||Market Cap|
DG Dollar General
OLLI Ollie's Bargain Outlet Holdings
MNSO MINISO Group Holding
DLTR Dollar Tree
Price-To-Earnings vs Peers: DLTR is expensive based on its Price-To-Earnings Ratio (23.6x) compared to the peer average (23.1x).
Price to Earnings Ratio vs Industry
How does DLTR's PE Ratio compare vs other companies in the Global Multiline Retail Industry?
Price-To-Earnings vs Industry: DLTR is expensive based on its Price-To-Earnings Ratio (23.6x) compared to the US Multiline Retail industry average (10.3x)
Price to Earnings Ratio vs Fair Ratio
What is DLTR's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PE Ratio||23.6x|
|Fair PE Ratio||18.3x|
Price-To-Earnings vs Fair Ratio: DLTR is expensive based on its Price-To-Earnings Ratio (23.6x) compared to the estimated Fair Price-To-Earnings Ratio (18.3x).
Share Price vs Fair Value
What is the Fair Price of DLTR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: DLTR ($156.25) is trading below our estimate of fair value ($233.89)
Significantly Below Fair Value: DLTR is trading below fair value by more than 20%.
Price to Earnings Growth Ratio
PEG Ratio: DLTR is poor value based on its PEG Ratio (2.8x)
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How is Dollar Tree forecast to perform in the next 1 to 3 years based on estimates from 22 analysts?
Future Growth Score2/6
Future Growth Score 2/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: DLTR's forecast earnings growth (8.4% per year) is above the savings rate (1.9%).
Earnings vs Market: DLTR's earnings (8.4% per year) are forecast to grow slower than the US market (13.7% per year).
High Growth Earnings: DLTR's earnings are forecast to grow, but not significantly.
Revenue vs Market: DLTR's revenue (5.4% per year) is forecast to grow slower than the US market (8.3% per year).
High Growth Revenue: DLTR's revenue (5.4% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: DLTR's Return on Equity is forecast to be high in 3 years time (20.9%)
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How has Dollar Tree performed over the past 5 years?
Past Performance Score3/6
Past Performance Score 3/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: DLTR has high quality earnings.
Growing Profit Margin: DLTR's current net profit margins (5.6%) are lower than last year (5.7%).
Past Earnings Growth Analysis
Earnings Trend: DLTR's earnings have grown by 7.6% per year over the past 5 years.
Accelerating Growth: DLTR's earnings growth over the past year (1.5%) is below its 5-year average (7.6% per year).
Earnings vs Industry: DLTR earnings growth over the past year (1.5%) exceeded the Multiline Retail industry -4.9%.
Return on Equity
High ROE: DLTR's Return on Equity (18.1%) is considered low.
Discover strong past performing companies
How is Dollar Tree's financial position?
Financial Health Score5/6
Financial Health Score 5/6
Short Term Liabilities
Long Term Liabilities
Financial Position Analysis
Short Term Liabilities: DLTR's short term assets ($6.3B) exceed its short term liabilities ($4.3B).
Long Term Liabilities: DLTR's short term assets ($6.3B) do not cover its long term liabilities ($9.8B).
Debt to Equity History and Analysis
Debt Level: DLTR's net debt to equity ratio (26.7%) is considered satisfactory.
Reducing Debt: DLTR's debt to equity ratio has reduced from 112% to 41.5% over the past 5 years.
Debt Coverage: DLTR's debt is well covered by operating cash flow (41.4%).
Interest Coverage: DLTR's interest payments on its debt are well covered by EBIT (15.4x coverage).
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What is Dollar Tree current dividend yield, its reliability and sustainability?
Dividend Score 0/6
Future Dividend Coverage
Dividend Yield vs Market
Notable Dividend: Unable to evaluate DLTR's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.
High Dividend: Unable to evaluate DLTR's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if DLTR's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if DLTR's dividend payments have been increasing.
Earnings Payout to Shareholders
Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: Unable to calculate sustainability of dividends as DLTR has not reported any payouts.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Mike Witynski (58 yo)
Mr. Michael A. Witynski, also known as Mike, serves as President and Chief Executive Officer at Dollar Tree, Inc. since July 2020 and serves as its Director since September 23, 2020. He served as President...
CEO Compensation Analysis
Compensation vs Market: Mike's total compensation ($USD10.25M) is about average for companies of similar size in the US market ($USD13.44M).
Compensation vs Earnings: Mike's compensation has been consistent with company performance over the past year.
Experienced Management: DLTR's management team is seasoned and experienced (7.9 years average tenure).
Experienced Board: DLTR's board of directors are not considered experienced ( 0.3 years average tenure), which suggests a new board.
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: DLTR insiders have only sold shares in the past 3 months.
Recent Insider Transactions
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Dollar Tree, Inc.'s employee growth, exchange listings and data sources
- Name: Dollar Tree, Inc.
- Ticker: DLTR
- Exchange: NasdaqGS
- Founded: 1986
- Industry: General Merchandise Stores
- Sector: Retail
- Implied Market Cap: US$35.086b
- Shares outstanding: 224.56m
- Website: https://www.dollartree.com
Number of Employees
- Dollar Tree, Inc.
- 500 Volvo Parkway
- United States
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/06/29 00:00|
|End of Day Share Price||2022/06/29 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.