Chesapeake, Virginia-headquarter Dollar Tree, Inc. (DLTR) operates retail discount stores. Valued at $16.1 billion by market cap, Dollar Tree offers a variety of consumable, seasonal, and general merchandise, including food, household items, health products, toys, and home goods, as well as apparel, automotive supplies, and pet products.
The discount retailer is expected to announce its fourth-quarter results on Wednesday, Mar. 12. Ahead of the event, analysts expect DLTR to report a non-GAAP profit of $2.18 per share, down 14.5% from $2.55 per share reported in the year-ago quarter. While the company beat or matched the consensus estimates twice over the past four quarters, it missed the forecast on two other occasions.
For the full fiscal 2025, DLTR is expected to report an adjusted EPS of $5.39, down 8.5% from $5.89 in fiscal 2023. However, its earnings are expected to rebound 12.4% year-over-year to $6.06 per share in fiscal 2026.
Dollar Tree’s stock has plummeted 43.5% over the past 52-week period, substantially underperforming the S&P 500 Index’s ($SPX) 24.1% gains and the Consumer Staples Select Sector SPDR Fund’s (XLP) 8.4% returns during the same time frame.
Dollar Tree’s underperformance primarily stems from the heightened competition and declining margins (on a YTD basis) which have severely impacted the company’s profitability.
However, DLTR stock rose 1.9% after the release of its Q3 results on Dec. 4 as the company surpassed Wall Street’s topline and earnings expectations. Driven by a notable growth in comps, its overall net revenues increased 3.5% year-over-year to $7.6 billion. Furthermore, its operating margins expanded by a modest 28 basis points compared to the year-ago quarter to 4.4% and its operating income increased 10.5% year-over-year to $333.4 million. Meanwhile, its adjusted EPS surged 15.5% year-over-year to $1.12 which exceeded the consensus estimates by 4.7%, boosting investors’ confidence.
Analysts’ consensus opinion on DLTR stock is moderately Bullish, with an overall “Moderate Buy” rating. Out of 24 analysts covering the stock, seven advise a “Strong Buy” rating, 16 give a “Hold,” and one recommends “Moderate Sell.” DLTR’s mean price target of $83.48 indicates an 11.4% upside potential from the current levels.
