Valued at a market cap of $15.4 billion, Dollar Tree, Inc. (DLTR) is an American discount variety store chain offering a wide range of products, including household goods, food, health and beauty items, and seasonal merchandise, all priced at $1 or less. The company operates under two primary brands: Dollar Tree and Family Dollar, the latter of which it acquired in 2015. Headquartered in Chesapeake, Virginia, Dollar Tree serves budget-conscious consumers, positioning itself as a leader in the value retail sector.
Shares of this discount store company have significantly lagged behind the broader market over the past 52 weeks. DLTR has declined nearly 48.8% over this time frame, while the broader S&P 500 Index ($SPX) has soared 22.3%. Moreover, shares of DLTR are down 4.5%, compared to SPX’s 4% gain on a YTD basis.
Zooming in further, DLTR’s underperformance looks more pronounced when compared to the Consumer Staples Select Sector SPDR Fund’s (XLP) 10.9% gain over the past 52 weeks and 2.5% return on a YTD basis.
Dollar Tree’s underperformance over the past year is due to macroeconomic challenges, including inflation and reduced consumer spending, along with store closures in the Family Dollar segment. Increased competition and declining margins have further hurt profitability and investor confidence.
However, DLTR stock edged up 1.9% after the release of its Q3 results on Dec. 4. Net revenues grew 3.5% year-over-year to $7.6 billion, driven by strong comp growth. Adjusted EPS increased 15.5% to $1.12, beating estimates by 4.7%, which boosted investor confidence.
For the fiscal year that ended in January 2025, analysts expect DLTR’s EPS to decline 8.5% year over year to $5.39. The company’s earnings surprise history is mixed. It met or surpassed the consensus estimates in just two of the last four quarters while missing on two other occasions.
Among the 24 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on seven “Strong Buy,” 16 “Hold,” and one “Moderate Sell” rating.
On Dec. 20, Telsey Advisory analyst Joe Feldman maintained a “Hold” rating on Dollar Tree and set a price target of $75.
The mean price target of $83 represents a 16% upside from DLTR’s current price levels. The Street-high price target of $105 suggests an upside potential of 46.7%.
On the date of publication, Kritika Sarmah 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.
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