What to Expect From Dollar Tree Earnings

Dollar Tree, Inc. (NASDAQ: DLTR) is scheduled to report its fiscal third-quarter financial results before the markets open on Tuesday. This company is finally benefitting on the top-line from its acquisition of Family Dollar, but last quarter this wasn’t enough. Hopefully, this quarter investors will come around.

The consensus estimates are calling for $0.78 in earnings per share (EPS) and $5.08 billion in revenue. The same period from last year had $0.49 in EPS and $4.95 billion in revenue.

In the fiscal second quarter the company saw a $2 billion increase in revenue as the result of an incremental $1.8 billion in net sales from Family Dollar stores, sales from new Dollar Tree stores and a 1.2% same-store sales increase on a constant currency basis.

Credit Suisse saw these past earnings as disappointing and it believes that industry fundamentals appear to be deteriorating and there is still no real evidence of a turnaround at Family Dollar.

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A lack of improvement in sales at Family Dollar is concerning given that the gap to Dollar General is productivity-based. Visibility on a near-term improvement is low, especially with Dollar General and other staples players like Wal-Mart focused on lowering prices. Credit Suisse remains concerned about the market’s high expectations around this deal and cautious overall on the stock. Weakening industry trends now create further incremental risk.

Prior to the release of the earnings report, a few analysts weighed in on the stock:

• Deutsche Bank reiterated a Buy rating with a $96 price target.
• Jefferies reiterated a Hold rating with an $80 price target.
• KeyCorp has an Overweight rating with a $90 price target.
• Credit Suisse has a Sell rating with a $69 price target.
• Cleveland Research has a Neutral rating.
• Atlantic Securities has an Underweight rating with a $68 price target.
• Barclays has an Equal Weight rating with an $88 price target.

So far in 2016, Dollar Tree has performed more or less in line with the broad markets with the stock up 6% in this time. Over the past 52-weeks the stock is up about 17.5%.

Shares of Dollar Tree were last trading at $81.79, with a consensus analyst price target of $91.25 and a 52-week trading range of $68.11 to $99.93.

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