Dollar Tree Inc DLTR will release its fourth-quarter earnings on March 13. Wall Street expects $2.65 in EPS and $8.67 billion in revenue, the company reports before market hours.
After lagging for much of 2023, the stock regained momentum in the fourth quarter. So far in 2024, the stock is up 4.75%. Being a discount retail chain, macroeconomics has a big impact on this stock. Investors in Dollar Tree stock should track inflation and consumer sentiment as leading indicators of company performance.
As the company prepares to release fourth-quarter results, here’s what Telsey analysts are focusing on.
Telsey Advisory Group analyst Joseph Feldmann reiterated its Outperform rating on Dollar Tree stock with a price target of $160. This indicates an upside of 8.04% from current price levels.
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Feldman’s investment thesis for Dollar Tree calls for strong earnings in Q4 2023 driven by sustained demand in core Dollar Tree, despite Family Dollar’s relatively flat trends. Factors that should contribute here include:
- The company’s affordable assortment, attractive to cost-conscious consumers
- Strategic initiatives, including multi-price products
While moderation in store traffic and negative High Single Digit (HSD) traffic at Family Dollar may impact results for Feldman, lower freight expenses and strategic initiatives are poised to improve profitability.
“Looking ahead to 2024, the company should begin to see early success from strategic initiatives and benefit from lower supply chain costs (EPS benefit of ~$1.00) and strong execution,” Feldman said.
Despite temporary headwinds such as product mix and losses, Family Dollar’s portfolio optimization and ongoing initiatives position the company for continued growth.
Initiative updates include:
- The expansion of multi-price products and frozen foods
- Family Dollar’s ongoing real estate strategy focuses on remodeling and optimizing its store portfolio
Overall, Dollar Tree emerges as an attractive investment opportunity with EPS potential of over $10 in 2026.
DLTR Price Action: Dollar Tree shares closed Monday up 0.74% at $149.
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