Valued at $21.2 billion by market cap, Dollar Tree, Inc. (DLTR) is a leading company in the discount retail sector. The Chesapeake, Virginia-based company operates both Dollar Tree and Family Dollar stores, offering a wide range of general merchandise at competitive prices.
Shares of this discount retailer have significantly underperformed the broader market over the past 52 weeks. DLTR has declined 31.5% over this time frame, while the broader S&P 500 Index ($SPX) has gained 26.1%. In 2024 alone, DLTR's stock dropped 30.5%, compared to SPX’s 16.5% rise on a YTD basis.
Zooming in further, DLTR's stock has also lagged behind the S&P Retail SPDR’s (XRT) 18.9% gain over the past 52 weeks and a 6.6% return on a YTD basis.
Dollar Tree has underperformed due to high inflation, which has led consumers to cut back on discretionary spending. Another factor responsible for its underperformance could be its ongoing struggles with the Family Dollar segment, including store closures and legal issues related to safety violations. Moreover, the stock dropped 4.9% on Jun. 5 after its Q1 earnings release due to a disappointing fiscal 2024 profit forecast that fell below analyst estimates. The outlook was further dampened by increased transportation costs following the loss of a distribution center in Oklahoma due to a tornado.
For the current fiscal year, ending in January 2025, analysts expect DLTR's EPS to grow 12.4% year over year to $6.62. The company's earnings surprise history is mixed. It beat or met the consensus estimates in two of the last four quarters while missing on two other occasions.
Among the 21 analysts covering the stock, the consensus rating is a “Moderate Buy.” That is based on 12 “Strong Buy” ratings, eight “Holds,” and one “Moderate Sell.”
This configuration is less bullish than three months ago, with 14 “Strong Buy” ratings on the stock.
On Aug. 12, Jefferies analyst Randal Konik maintained a “Hold” rating on Dollar Tree and set a price target of $105. This new price target implies a potential upside of just 6.3% from the current price.
The mean price target of $137.23 represents a premium of 38.9% to DLTR’s current levels. The street-high price target of $170 implies a potential upside of 72.1% from the current price.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
