Now trading at a price of $106.54, Dollar Tree has moved -1.5% so far today.
Dollar Tree returned losses of -23.0% last year, with its stock price reaching a high of $170.36 and a low of $102.77. Over the same period, the stock underperformed the S&P 500 index by -46.0%. As of April 2023, the company's 50-day average price was $123.92. Dollar Tree, Inc. operates discount variety retail stores. Based in Chesapeake, VA, the large-cap Consumer Discretionary company has 65,025 full time employees. Dollar Tree has not offered a dividend during the last year.
Healthy Debt Levels but a Declining EPS Growth Trend:
| 2018-03-16 | 2019-03-27 | 2020-03-20 | 2021-03-16 | 2022-03-15 | 2023-03-10 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $22,246 | $22,823 | $23,611 | $25,509 | $26,321 | $28,332 |
| Gross Margins | 32.0% | 30.0% | 30.0% | 31.0% | 28.0% | 32.0% |
| Operating Margins | 9% | 8% | 7% | 7% | 7% | 8% |
| Net Margins | 8.0% | -7.0% | 4.0% | 5.0% | 5.0% | 6.0% |
| Net Income (MM) | $1,714 | -$1,591 | $827 | $1,342 | $1,328 | $1,615 |
| Net Interest Expense (MM) | -$302 | -$370 | -$162 | -$147 | -$179 | -$125 |
| Depreciation & Amort. (MM) | -$611 | -$621 | -$645 | -$687 | -$716 | -$768 |
| Earnings Per Share | $7.21 | -$6.66 | $3.47 | $5.65 | $5.79 | $7.04 |
| EPS Growth | n/a | -192.37% | 152.1% | 62.82% | 2.48% | 21.59% |
| Diluted Shares (MM) | 238 | 239 | 238 | 237 | 230 | 230 |
| Free Cash Flow (MM) | $2,142 | $2,583 | $2,890 | $3,606 | $2,451 | $2,869 |
| Capital Expenditures (MM) | -$632 | -$817 | -$1,020 | -$890 | -$1,020 | -$1,254 |
| Net Current Assets (MM) | -$4,574 | -$3,565 | -$9,050 | -$8,360 | -$8,394 | -$7,904 |
| Long Term Debt (MM) | $4,862 | $4,344 | $3,522 | $3,226 | $3,417 | $3,422 |
Dollar Tree has strong margins with a stable trend, healthy debt levels, and wider gross margins than its peer group. However, the firm has declining EPS growth. Finally, we note that Dollar Tree has weak revenue growth and a flat capital expenditure trend, irregular cash flows, and just enough current assets to cover current liabilities.
Dollar Tree's Valuation Is in Line With Its Sector Averages:
Dollar Tree has a trailing twelve month P/E ratio of 21.8, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $7.07, the company has a forward P/E ratio of 17.5. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is -3.9%. On this basis, the company's PEG ratio is -5.6, which indicates that its shares are overpriced. In contrast, the market is likely undervaluing Dollar Tree in terms of its equity because its P/B ratio is 2.59 while the sector average is 3.12. The company's shares are currently trading 37.1% above their Graham number.
There's an Analyst Consensus of Strong Upside Potential for Dollar Tree:
The 23 analysts following Dollar Tree have set target prices ranging from $105.0 to $195.0 per share, for an average of $150.7 with a buy rating. As of April 2023, the company is trading -17.8% away from its average target price, indicating that there is an analyst consensus of strong upside potential.
Dollar Tree has an average amount of shares sold short because 3.6% of the company's shares are sold short. Institutions own 103.2% of the company's shares, and the insider ownership rate stands at 0.26%, suggesting a small amount of insider investors. The largest shareholder is Vanguard Group Inc, whose 11% stake in the company is worth $2,546,858,644.
