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DLTR

Dollar Tree NasdaqGS:DLTR Stock Report

Last Price

US$168.95

Market Cap

US$37.9b

7D

2.5%

1Y

66.6%

Updated

09 Aug, 2022

Data

Company Financials +
DLTR fundamental analysis
Snowflake Score
Valuation2/6
Future Growth2/6
Past Performance3/6
Financial Health5/6
Dividends0/6

DLTR Stock Overview

Dollar Tree, Inc. operates discount variety retail stores.

Dollar Tree, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Dollar Tree
Historical stock prices
Current Share PriceUS$168.95
52 Week HighUS$177.19
52 Week LowUS$84.26
Beta0.68
1 Month Change0.95%
3 Month Change8.25%
1 Year Change66.59%
3 Year Change78.59%
5 Year Change130.05%
Change since IPO14,355.95%

Recent News & Updates

Jul 19
Returns On Capital At Dollar Tree (NASDAQ:DLTR) Have Hit The Brakes

Returns On Capital At Dollar Tree (NASDAQ:DLTR) Have Hit The Brakes

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Amongst other things...

Jun 30

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.

Shareholder Returns

DLTRUS Multiline RetailUS Market
7D2.5%1.4%0.3%
1Y66.6%-16.4%-13.5%

Return vs Industry: DLTR exceeded the US Multiline Retail industry which returned -14.5% over the past year.

Return vs Market: DLTR exceeded the US Market which returned -13% over the past year.

Price Volatility

Is DLTR's price volatile compared to industry and market?
DLTR volatility
DLTR Average Weekly Movement8.7%
Multiline Retail Industry Average Movement10.6%
Market Average Movement7.9%
10% most volatile stocks in US Market17.2%
10% least volatile stocks in US Market3.2%

Stable Share Price: DLTR is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 9% a week.

Volatility Over Time: DLTR's weekly volatility (9%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1986136,226Mike Witynskihttps://www.dollartree.com

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, Inc. Fundamentals Summary

How do Dollar Tree's earnings and revenue compare to its market cap?
DLTR fundamental statistics
Market CapUS$37.94b
Earnings (TTM)US$1.49b
Revenue (TTM)US$26.74b

25.5x

P/E Ratio

1.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
DLTR income statement (TTM)
RevenueUS$26.74b
Cost of RevenueUS$18.62b
Gross ProfitUS$8.12b
Other ExpensesUS$6.63b
EarningsUS$1.49b

Last Reported Earnings

Apr 30, 2022

Next Earnings Date

Aug 25, 2022

Earnings per share (EPS)6.63
Gross Margin30.37%
Net Profit Margin5.57%
Debt/Equity Ratio41.5%

How did DLTR perform over the long term?

See historical performance and comparison