|
Related Topics
|
Category: Stock Market and Dollar Tree
Date: 28 May 2020 Stock Price of Dollar Tree: $87.53 We take a look at the 1st quarter of their 2020 fiscal year earnings report of Dollar Tree Inc a variety discount store group that owns two brands, Dollar Tree and Family Dollar. The group saw revenue growth of almost 9% but their costs increased at a faster rate leading to lower profits.
|
About Dollar Tree Inc
We have worked hard to create an environment where shopping is fun... a place where our customers can discover new treasures every week... a store where entire families can enjoy hunting for that special something. Every Dollar Tree store is bright and well lit, clean and well organized, and stocked with endless hidden treasures!
Just as important, we continue to offer our customers products they need at extreme values! We carry a broad, exciting mix of merchandise that includes many trusted national and regional brands. Some of the product departments you'll find at Dollar Tree include housewares, glassware, dinnerware, cleaning supplies, candy, snacks, food, health and beauty, toys, gifts, gift bags and wrap, party supplies, stationery, craft supplies, teaching supplies, books, seasonal décor, and so much more. Everything you need for every day, every holiday, every occasion... and every single item is only $1 (or less)!
The best part is that there is probably a Dollar Tree store near you! We are a national American based company with thousands of stores conveniently located in shopping centers and malls in all 48 contiguous states. You can also shop online for larger quantities of the same items you'd find in our stores, plus check out craft and project ideas
Just as important, we continue to offer our customers products they need at extreme values! We carry a broad, exciting mix of merchandise that includes many trusted national and regional brands. Some of the product departments you'll find at Dollar Tree include housewares, glassware, dinnerware, cleaning supplies, candy, snacks, food, health and beauty, toys, gifts, gift bags and wrap, party supplies, stationery, craft supplies, teaching supplies, books, seasonal décor, and so much more. Everything you need for every day, every holiday, every occasion... and every single item is only $1 (or less)!
The best part is that there is probably a Dollar Tree store near you! We are a national American based company with thousands of stores conveniently located in shopping centers and malls in all 48 contiguous states. You can also shop online for larger quantities of the same items you'd find in our stores, plus check out craft and project ideas
Overview of Dollar Tree's 1st quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Net sales: $6.286 billion (up from $5.807 billion for the same quarter in the previous year)
- Net sales increased by 8.24% over the last 12 months
- Cost of sales: $4.491 billion (up from $4.081 billion for the same quarter in the previous year)
- Cost of sales increased by 10.04% over the last 12 months
- Net earnings: $247.6 million (down from $267.9 million for the same quarter in the previous year)
- Diluted earnings per share: $1.04 (down from $1.12 for the same quarter in the previous year)
- PE ratio of Dollar Tree: 21.1
- Diluted number of shares in issue: 237.4 million (down from 239.1 million for the same quarter of the previous year)
- Cash and equivalents: $1.755 billion
- Cash and equivalents per share: $7.39
- Cash and equivalents makes up 8.4% of Dollar Tree's current market capital
- Cash and equivalents makes up 8.6% of Dollar Tree's total assets
- Inventories: $3.198 billion
- Inventories makes up 15.6% of Dollar Tree's total assets
- Cash generated from operations for the 1st quarter of 2020: $959 million
- Cash generated from operations per share for the 3 quarters of 2019: $4.04
Dollar Tree's management commentary on their 1st quarter 2020 earnings report
“I am extremely proud of the team’s extraordinary efforts to serve customers through what has been an incredibly tumultuous time,” stated Gary Philbin, Chief Executive Officer. “After a relatively normal first month in the quarter, our stores experienced an unprecedented spike in demand for certain products in March. The teams quickly rose to the challenge to make our stores safer for associates and customers by following CDC guidelines, along with enhanced cleaning protocols. We were focused and dedicated to delivering essentials to customers when they needed us most.”
Mike Witynski, Enterprise President, added, “Family Dollar delivered strong same-store sales with a 15.5% increase and a 230 basis point improvement in operating margin. Dollar Tree same-store sales decreased by 90 basis points, as the seasonal and discretionary business was materially impacted by lower Easter holiday sales. The most negatively impacted categories - party, candy, and Easter - affected Dollar Tree’s overall comp for the quarter by approximately 490 basis points.”
Mike Witynski, Enterprise President, added, “Family Dollar delivered strong same-store sales with a 15.5% increase and a 230 basis point improvement in operating margin. Dollar Tree same-store sales decreased by 90 basis points, as the seasonal and discretionary business was materially impacted by lower Easter holiday sales. The most negatively impacted categories - party, candy, and Easter - affected Dollar Tree’s overall comp for the quarter by approximately 490 basis points.”
Update on Company Outlook, Initiatives and Liquidity
Due to uncertainty related to the COVID-19 pandemic, the Company withdrew its first quarter and fiscal 2020 guidance in its March 31, 2020, Business Update. Given the expectation of continued volatility and uncertainty, the Company is not issuing updated guidance at this time. The continuing uncertainties include, but are not limited to the:
Additionally, as announced in its March Business Update, the Company had suspended its Family Dollar H2 renovation and its Dollar Tree Snack Zone installation initiatives in an effort to minimize travel and further protect its associates. Both of these initiatives are in the process of resuming in select, lower-risk markets. The Company now expects to complete approximately 750 Family Dollar H2 renovations in fiscal year 2020 compared to its original expectation of 1,250. The Company’s target for annual Dollar Tree Snack Zone installations is unchanged, although the timing of completion will shift related to the suspension. The Company now expects to open 500 new stores in fiscal 2020 (consisting of 325 Dollar Tree and 175 Family Dollar), compared to its original plan of 550 new stores (consisting of 350 Dollar Tree and 200 Family Dollar). The timing for completion of new store openings is also expected to be deferred.
Capital expenditures for fiscal 2020 are now expected to be approximately $1.0 billion as compared to our original expected expenditures of $1.2 billion.
The Company ended the quarter with $1.76 billion in cash on its balance sheet, including $750 million drawn on the Company’s revolving line of credit.
As stated in its March Business Update, the Company has temporarily suspended share repurchases. The current share repurchase authorization has $800 million remaining.
“Following a volatile sales environment in the first quarter, I am extremely pleased with the momentum we are seeing in our business early in the second quarter. At Family Dollar, we are seeing continued sales strength with improvements in our discretionary categories. For Dollar Tree, we have seen a rebound on the discretionary side of the business following the Easter holiday, especially in crafts, graduation, stationery, Mother’s Day seasonal and balloons,” Philbin added. “We have a resilient business model that has been demonstrated to work in varying economic climates. With more than 38 million Americans filing unemployment claims in the past nine weeks, we believe that Dollar Tree and Family Dollar are part of the solution to help millions of families stretch their budgets to help make ends meet. Our focus is on meeting customer needs, while growing and improving our business to deliver long-term value to shareholders.”
Due to uncertainty related to the COVID-19 pandemic, the Company withdrew its first quarter and fiscal 2020 guidance in its March 31, 2020, Business Update. Given the expectation of continued volatility and uncertainty, the Company is not issuing updated guidance at this time. The continuing uncertainties include, but are not limited to the:
- Evolution of macroeconomic factors, including the escalation in unemployment rates;
- Variability of vendor supply chains being able to meet product demand on a timely basis;
- Volatility in consumer demand related to the crisis;
- Value and timing of government stimulus;
- Duration, degree, and geographic breadth of varying shelter-in-place mandates;
- Uncertainties related to the economic environment through the remainder of the fiscal year; and,
- Incremental costs related to managing the business through this unprecedented, challenging time.
Additionally, as announced in its March Business Update, the Company had suspended its Family Dollar H2 renovation and its Dollar Tree Snack Zone installation initiatives in an effort to minimize travel and further protect its associates. Both of these initiatives are in the process of resuming in select, lower-risk markets. The Company now expects to complete approximately 750 Family Dollar H2 renovations in fiscal year 2020 compared to its original expectation of 1,250. The Company’s target for annual Dollar Tree Snack Zone installations is unchanged, although the timing of completion will shift related to the suspension. The Company now expects to open 500 new stores in fiscal 2020 (consisting of 325 Dollar Tree and 175 Family Dollar), compared to its original plan of 550 new stores (consisting of 350 Dollar Tree and 200 Family Dollar). The timing for completion of new store openings is also expected to be deferred.
Capital expenditures for fiscal 2020 are now expected to be approximately $1.0 billion as compared to our original expected expenditures of $1.2 billion.
The Company ended the quarter with $1.76 billion in cash on its balance sheet, including $750 million drawn on the Company’s revolving line of credit.
As stated in its March Business Update, the Company has temporarily suspended share repurchases. The current share repurchase authorization has $800 million remaining.
“Following a volatile sales environment in the first quarter, I am extremely pleased with the momentum we are seeing in our business early in the second quarter. At Family Dollar, we are seeing continued sales strength with improvements in our discretionary categories. For Dollar Tree, we have seen a rebound on the discretionary side of the business following the Easter holiday, especially in crafts, graduation, stationery, Mother’s Day seasonal and balloons,” Philbin added. “We have a resilient business model that has been demonstrated to work in varying economic climates. With more than 38 million Americans filing unemployment claims in the past nine weeks, we believe that Dollar Tree and Family Dollar are part of the solution to help millions of families stretch their budgets to help make ends meet. Our focus is on meeting customer needs, while growing and improving our business to deliver long-term value to shareholders.”
Dollar Tree Inc (NASDAQ: DLTR) stock price history
The image below, obtained from Google, shows the stock price history of Dollar Tree Inc. over the last 5 years. And as the image shows while its been a rather volatile ride for Dollar Tree shareholders the overwhelming trend has been upwards. The group's stock traded at around $75 a stock 5 years ago and is currently trading at $87.53 a stock. That's a return of 16.7% provided to Dollar Tree stockholders over the last 5 years.
Dollar Tree's stock is trading at close to the midpoint between its 52 week high and 52 week low which to us is an indication that the sentiment and momentum of Dollar Tree's stock is neutral at this point in time.
Dollar Tree's stock is trading at close to the midpoint between its 52 week high and 52 week low which to us is an indication that the sentiment and momentum of Dollar Tree's stock is neutral at this point in time.
Recent Google search trends for Dollar Tree stock price and DLTR stock price
The graphic below shows the trend in Google searches for Dollar Tree stock price and DLTR stock price over the last 12 months in the United States as obtained from Google Trends. It also shows that Dollar Tree stock price is a more popular search term than DLTR stock price. And there was a significant surge in the number of searches for Dollar Tree stock price in early March 2020.
Dollar Tree (DLTR) stock vs Dollar General (DG) stock
The image below shows the stock price performance of Dollar Tree (DLTR) and Dollar General (DG) over the last 3 years. The stock performance of Dollar General has performed a lot better of the three year period than the stock of Dollar Tree. With Dollar Tree's stock increasing with 16.16% over the last 3 years compared to the stock of Dollar General that increased by 149.23% over the last 3 years.
Recent coverage of Dollar Tree
The extract below discusses the latest regarding Dollar Tree as obtained from TheStreet.com
Estimates: Analysts expected Dollar Tree earnings per share to fall 19% to 92 cents. Revenue was expected to rise 4% to $6.07 billion. Same-store sales were seen rising 5.1% overall. They were seen slipping 1% at Dollar Tree outlets and rising 10.8% at Family Dollar stores.
Results: Dollar Tree earnings dipped to $1.04 with revenue rising 8% to $6.29 billion. Same-store sales climbed 7% overall. Dollar Tree comps dipped 0.9% but Family Dollar same-store sales jumped 15.5%.
Stock: Shares rose 4% early Thursday.
Read the full article here
Estimates: Analysts expected Dollar Tree earnings per share to fall 19% to 92 cents. Revenue was expected to rise 4% to $6.07 billion. Same-store sales were seen rising 5.1% overall. They were seen slipping 1% at Dollar Tree outlets and rising 10.8% at Family Dollar stores.
Results: Dollar Tree earnings dipped to $1.04 with revenue rising 8% to $6.29 billion. Same-store sales climbed 7% overall. Dollar Tree comps dipped 0.9% but Family Dollar same-store sales jumped 15.5%.
Stock: Shares rose 4% early Thursday.
Read the full article here
Dollar Tree Inc. (NASDAQ: DLTR) latest stock valuation
So what do we value Dollar Tree stock at based on their 1st quarter 2020 earnings release? Based on Dollar Tree Inc. latest earnings our valuation model provides a target price (full value price) for Dollar Tree stock at $81.90 a stock (down from our 3rd quarter 2019 earnings report valuation of Dollar Tree). We therefore believe the stock of Dollar Tree is slightly overvalued
Our valuation model target price for Dollar Tree Inc of $81.90 takes into account the potential impact of the trade war (and continue tariff increases between the USA and China). We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $81.90. A good entry point into Dollar Tree would therefore be at $73.70 below.
We expect the stock of Dollar Tree to trade in a narrow range around its current price in coming weeks and months
Our valuation model target price for Dollar Tree Inc of $81.90 takes into account the potential impact of the trade war (and continue tariff increases between the USA and China). We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $81.90. A good entry point into Dollar Tree would therefore be at $73.70 below.
We expect the stock of Dollar Tree to trade in a narrow range around its current price in coming weeks and months
Next earnings release of Dollar Tree
It is expected that Dollar Tree will release their 2nd quarter and full fiscal 2020 earnings report in late August 2020