Chesapeake, Virginia-based Dollar Tree, Inc. (DLTR) operates discount variety stores offering merchandise and other assortments. Its operations span major metropolitan areas, as well as mid-sized cities and small towns. With a market cap of $13.8 billion, Dollar Tree operates through Dollar Tree and Family Dollar segments.
Companies worth $10 billion or more are generally described as “large-cap stocks,” Dollar Tree fits right into that category, with its market cap exceeding the threshold, reflecting its substantial size and influence in the discount stores industry.
Despite its strengths, the stock has tanked 52.9% from its 52-week high of $137.14 touched on Apr. 1, 2024. DLTR stock has plunged 11.5% over the past three months, performing slightly better than the SPDR S&P Retail ETF’s (XRT) 15.3% decline during the same time frame.
Dollar Tree’s performance looks much more grimmer over the longer term. DLTR stock has plummeted 10% over the past six months and a staggering 49.6% over the past 52 weeks, compared to XRT’s 10.1% decline over the past six months and 11% drop over the past year.
To confirm the bearish trend, DLTR has traded consistently below its 200-day moving average since April last year and mostly below its 50-day moving average over the past year with some fluctuations in recent months.
Dollar Tree’s stock gained 1.9% after the release of its better-than-expected Q3 results on Dec. 4, 2024. Driven by 1.8% and 1.9% growth in Dollar Tree and Family Dollar’s respective comparable sales and a total of 255 new store openings, the company’s overall topline increased 3.5% year-over-year to approximately $7.6 billion which exceeded the Street’s expectations by 1.4%. Meanwhile, the company also experienced slight margin expansion, leading to a 13.5% year-over-year growth in adjusted net income to $240.6 million and its adjusted EPS of $1.12 surpassed the consensus estimates by 4.7%. Furthermore, the company also experienced a solid growth in operating cash flows which boosted investor confidence.
However, the company has notably lagged behind its peer BJ's Wholesale Club Holdings, Inc.’s (BJ) 34.1% gains over the past six months and a 39.8% surge over the past year.
Nevertheless, analysts remain optimistic about the company’s long-term prospects. Among the 24 analysts covering the DLTR stock, the consensus rating is a “Moderate Buy.” Its mean price target of $82 suggests a 27% upside potential from current price levels.
