Retail
Why Dollar Tree Looks Better Than Dollar General After Earnings
Published:
Last Updated:
Dollar General Corp. (NYSE: DG) reported its fiscal third-quarter financial results before the markets opened on Thursday. Unfortunately, these earnings did not live up to the expectations set earlier last week by rival Dollar Tree Inc. (NASDAQ: DLTR). 24/7 Wall St. has taken highlights from each company’s earnings report and compared them to find out who is winning going into December.
Dollar General said that it had $0.89 in earnings per share (EPS) and $5.32 billion in revenue. The consensus estimates from Thomson Reuters called for $0.93 in EPS and $5.37 billion in revenue. The same period from last year had $0.88 in EPS and $5.07 billion in revenue.
Same-store sales decreased 0.1% from the 2015 third quarter, primarily due to a decline in traffic, partially offset by an increase in average transaction amount. Same-store sales were driven by positive results in the consumables category, offset by negative results in the seasonal, apparel and home products categories. The net sales increase was positively affected by sales from new stores, modestly offset by sales from closed stores.
Earlier this year, Dollar General noted that it intended to update its diluted EPS guidance for this fiscal year only if it no longer reasonably expects diluted EPS growth to fall within the 10% to 15% range. The company now forecasts diluted EPS growth for fiscal 2016 to be at the low end of the company’s long-term growth model range. The consensus estimates are $4.49 in EPS and $22.08 billion in revenue for the fiscal year.
Dollar Tree posted EPS of $0.81 and $5.0 billion in revenue, versus consensus estimates of $0.78 in EPS and revenue of $5.08 billion. The same period of last year reportedly 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.
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 call for $1.29 in EPS and $5.63 billion in revenue.
Shares of Dollar General closed Wednesday at $77.32, with a consensus analyst price target of $82.74 and a 52-week trading range of $66.27 to $96.88. Following the release of the earnings report, the stock was down 7.5% at $71.51 in early trading indications Thursday.
Dollar Tree shares were down 1.6% at $86.75 in early trading indications Thursday. The consensus price target is $95.32, and the 52-week range is $72.52 to $99.93.
Start by taking a quick retirement quiz from SmartAsset that will match you with up to 3 financial advisors that serve your area and beyond in 5 minutes, or less.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Get started right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.