Why Dollar Tree Earnings Are So Important

By Chris Lange Updated Jan 12, 5:31PM EST · Published Nov 22, 8:48AM EST

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Why Dollar Tree Earnings Are So Important — © Thinkstock

Dollar Tree, Inc. (NASDAQ: DLTR) reported its fiscal third-quarter financial results on Tuesday before the markets opened. Overall the continued progress in building the foundation of a consolidated Dollar Tree and Family Dollar has been effective in driving earnings for this quarter. It also helps that guidance took a noticeable uptick looking ahead to the holiday season.

The company said that it had $0.81 in earnings per share (EPS) and $5.0 billion in revenue. The consensus estimates from Thomson Reuters called for $0.78 in EPS and $5.08 billion in revenue. The same period from last year had $0.49 in EPS and $4.95 billion in revenue.

Same-store sales increased 1.7%, on a constant currency basis, compared to a 2.1% increase in the prior-year period. Adjusted for the impact of Canadian currency fluctuations, the same-store sales increase was 1.8%. The same-store sales growth, representing the company’s 35th consecutive quarter of positive same-store sales, was driven by increases in comparable customer count and average ticket.

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In terms of the guidance for the fiscal fourth-quarter, the company expects to see EPS in the range of $1.24 to $1.33 (up from the previous level of $1.21 to $1.30) and net sales in the range of $5.59 billion to $5.69 billion, based on low single-digit increases in same-store sales for the Dollar Tree and Family Dollar segments. The consensus estimates are calling for $1.29 in EPS and $5.63 billion in revenue.

On the books, cash, cash equivalents, and short-term investments totaled $737.8 million at the end of the quarter, versus $740.1 million at the end of the previous fiscal year.

Bob Sasser, CEO of Dollar Tree, commented:

I am proud of our team’s achievements in our third quarter. Our results demonstrated a solid performance in our Dollar Tree segment, continued meaningful progress in our integration of Family Dollar, and our ability to refinance and pre-pay a portion of our outstanding debt in order to reduce future interest costs. After adding back $0.09 per share of expenses related to our debt refinancing, our operating performance of $0.81 per diluted share was near the top end of our third quarter EPS guidance range of $0.76 to $0.82.

Shares of Dollar Tree closed Monday at $81.99, with a consensus analyst price target of $91.25 and a 52-week trading range of $68.51 to $99.93. Following the release of the earnings report, the stock was up 8.5% at $89.00 in early trading indications Tuesday.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.