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Category: Stock Market and Dollar Tree
Date: 2 December 2019 Stock Price: $89.34 We take a look at the 3rd quarter of their 2019 fiscal year earnings report of Dollar Tree Inc a variety discount store group that owns two brands, Dollar Tree and Family Dollar
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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 3rd quarter 2019 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Net sales: $5.746 billion (up from $5.583 billion for the same quarter in the previous year)
- Net sales increased by 2.8% over the last 12 months
- Cost of sales: $4.041 billion (up from $3.866 billion for the same quarter in the previous year)
- Cost of sales increased by 4.5% over the last 12 months
- Net earnings: $255.8 million (down from $281.8 million for the same quarter in the previous year)
- Diluted earnings per share: $1.08 (down from $1.18 for the same quarter in the previous year)
- PE ratio of Dollar Tree: 22.3
- Diluted number of shares in issue: 237.5 million (down from 238.7 million for the same quarter of the previous year)
- Cash and equivalents: $433.7 million
- Cash and equivalents per share: $1.82
- Cash and equivalents makes up 2.1% of Dollar Tree's current market capital
- Cash and equivalents makes up 2.19% of Dollar Tree's total assets
- Inventories: $3.882 billion
- Inventories makes up 19.6% of Dollar Tree's total assets
- Dollar Tree's inventories increased by 4.5% over the last 12 months
- Cash generated from operations for the 3 quarters of 2019: $1.014 billion
- Cash generated from operations per share for the 3 quarters of 2019: $4.26
Dollar Tree's management commentary on the results and earnings guidance
CHESAPEAKE, Va.--(BUSINESS WIRE)--Nov. 26, 2019-- Dollar Tree, Inc. (NASDAQ: DLTR), North America's leading operator of discount variety stores, today reported financial results for the quarter ended November 2, 2019.
“The third quarter represented another period of solid sales performance for both brands, Dollar Tree and Family Dollar. Our store optimization efforts and sales driving initiatives are working. The teams have completed more than 1,150 Family Dollar H2 renovations, nearly 200 Dollar Tree re-banners, more than 1,000 Dollar Tree Snack Zones and launched our Dollar TreePlus! test already this year,” stated Gary Philbin, President and Chief Executive Officer. “Fiscal 2019 has been a unique year as the result of several factors: the material acceleration in our Family Dollar store optimization initiatives, the consolidation of our two store support centers into southeast Virginia, the global helium shortage, and the continued uncertainty regarding trade and the related tariffs. I am proud of our team’s efforts and the sales execution through this environment.”
“The third quarter represented another period of solid sales performance for both brands, Dollar Tree and Family Dollar. Our store optimization efforts and sales driving initiatives are working. The teams have completed more than 1,150 Family Dollar H2 renovations, nearly 200 Dollar Tree re-banners, more than 1,000 Dollar Tree Snack Zones and launched our Dollar TreePlus! test already this year,” stated Gary Philbin, President and Chief Executive Officer. “Fiscal 2019 has been a unique year as the result of several factors: the material acceleration in our Family Dollar store optimization initiatives, the consolidation of our two store support centers into southeast Virginia, the global helium shortage, and the continued uncertainty regarding trade and the related tariffs. I am proud of our team’s efforts and the sales execution through this environment.”
Company Outlook
Just prior to the Company’s previous quarterly earnings announcement on August 29, 2019, the United States Trade Representative (USTR) announced that tariffs on List 1, 2, and 3 products would increase from 25% to 30% on October 1, 2019, tariffs on List 4A products would increase from 10% to 15% on September 1, 2019, and tariffs on List 4B products would increase from 10% to 15% on December 15, 2019. As noted in its August 29, 2019 earnings announcement, the outlook provided at that time did not include any impact related to these changes.
The Company now estimates that Section 301 tariffs will increase its cost of goods sold by approximately $19 million, or $0.06 per diluted share, in the fourth quarter of 2019 if tariffs are fully implemented. The Company estimates consolidated net sales for the fourth quarter of 2019 will range from $6.33 billion to $6.44 billion, based on a low single-digit increase in same-store sales for the enterprise. Diluted earnings per share for the quarter, including tariff costs, are estimated to be in the range of $1.70 to $1.80.
The decrease from prior implied fourth quarter guidance represents the expected effects of: Section 301 tariffs; additional pressure on merchandise margin based on lower-margin consumables growing faster than originally forecasted; payroll cost pressure in distribution centers; and increased run rates for repairs and maintenance, utilities and depreciation.
Consolidated net sales for full-year fiscal 2019 are now expected to range from $23.62 billion to $23.74 billion compared to the Company’s previously expected range of $23.57 billion to $23.79 billion. This estimate is based on a low single-digit increase in same-store sales and 1.1% selling square footage growth. The Company now anticipates diluted earnings per share for full-year fiscal 2019 will range between $4.66 and $4.76. This includes discrete costs of approximately $85 million, or $0.28 per diluted share, approximately $15 million, or $0.05 per diluted share, in store closure related costs, and approximately $19 million, or $0.06 per diluted share, from tariffs.
“The value and convenience offered by Dollar Tree and Family Dollar continue to resonate with our shoppers, as demonstrated by the Company’s sales performance in the first three quarters of fiscal 2019,” Philbin added. “With several critical initiatives now behind us, including the acceleration in store optimization initiatives and the consolidation of our store support centers, we are planning for more than 1,000 Family Dollar H2 renovations for fiscal 2020 and are increasing our focus on operating margin performance. Our teams are well prepared for the holiday season and closing out an important year for our Company. We believe we have built a strong foundation to enhance our ability to grow and improve our business to deliver long-term value to our shareholders.”
Just prior to the Company’s previous quarterly earnings announcement on August 29, 2019, the United States Trade Representative (USTR) announced that tariffs on List 1, 2, and 3 products would increase from 25% to 30% on October 1, 2019, tariffs on List 4A products would increase from 10% to 15% on September 1, 2019, and tariffs on List 4B products would increase from 10% to 15% on December 15, 2019. As noted in its August 29, 2019 earnings announcement, the outlook provided at that time did not include any impact related to these changes.
The Company now estimates that Section 301 tariffs will increase its cost of goods sold by approximately $19 million, or $0.06 per diluted share, in the fourth quarter of 2019 if tariffs are fully implemented. The Company estimates consolidated net sales for the fourth quarter of 2019 will range from $6.33 billion to $6.44 billion, based on a low single-digit increase in same-store sales for the enterprise. Diluted earnings per share for the quarter, including tariff costs, are estimated to be in the range of $1.70 to $1.80.
The decrease from prior implied fourth quarter guidance represents the expected effects of: Section 301 tariffs; additional pressure on merchandise margin based on lower-margin consumables growing faster than originally forecasted; payroll cost pressure in distribution centers; and increased run rates for repairs and maintenance, utilities and depreciation.
Consolidated net sales for full-year fiscal 2019 are now expected to range from $23.62 billion to $23.74 billion compared to the Company’s previously expected range of $23.57 billion to $23.79 billion. This estimate is based on a low single-digit increase in same-store sales and 1.1% selling square footage growth. The Company now anticipates diluted earnings per share for full-year fiscal 2019 will range between $4.66 and $4.76. This includes discrete costs of approximately $85 million, or $0.28 per diluted share, approximately $15 million, or $0.05 per diluted share, in store closure related costs, and approximately $19 million, or $0.06 per diluted share, from tariffs.
“The value and convenience offered by Dollar Tree and Family Dollar continue to resonate with our shoppers, as demonstrated by the Company’s sales performance in the first three quarters of fiscal 2019,” Philbin added. “With several critical initiatives now behind us, including the acceleration in store optimization initiatives and the consolidation of our store support centers, we are planning for more than 1,000 Family Dollar H2 renovations for fiscal 2020 and are increasing our focus on operating margin performance. Our teams are well prepared for the holiday season and closing out an important year for our Company. We believe we have built a strong foundation to enhance our ability to grow and improve our business to deliver long-term value to our 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 $68.40 a stock 5 years ago and is currently trading at $89.34 a stock. That's a return of 30.6% provided to Dollar Tree stockholders over the last 5 years.
Dollar Tree's stock is trading at a lot closer to its 52 week low of $81.71 than it is to its 52 week high of $119.71 which to us is a clear indication that the short term momentum and sentiment of Dollar Tree stock is negative.
Dollar Tree's stock is trading at a lot closer to its 52 week low of $81.71 than it is to its 52 week high of $119.71 which to us is a clear indication that the short term momentum and sentiment of Dollar Tree stock is negative.
Recent coverage of Dollar Tree
The extract below discusses the latest regarding Dollar Tree as obtained from TheStreet.com
Dollar Tree (DLTR - Get Report) shares were being hammered on Tuesday, down 16.5% after the discount retailer reported a third-quarter earnings miss and issued disappointing guidance.
While shares rallied impressively ahead of the results, it proved to be a fake-out ahead of a painful post-earnings correction.
Should investors buy the dip? I wouldn't have a problem with buying Dollar Tree stock on this pullback if it weren't for all the far more attractive candidates in the retail sector. For instance, Best Buy (BBY - Get Report) and Burlington Stores (BURL - Get Report) were spiking on better-than-expected earnings on Tuesday. Target (TGT - Get Report) , Lowe's (LOW - Get Report) and Walmart (WMT - Get Report) all reported solid results too. I would feel more comfortable buying into strength and getting these names on pullbacks rather than getting long Dollar Tree stock on this earnings print.
Earnings of $1.08 a share missed expectations by 5 cents, while sales of $5.75 billion grew 3.8% year over year and eked past analysts' estimates. The sales and profit results weren't really the problem, as shares actually rallied in the premarket session on the headline results.
The midpoint of management's fourth-quarter revenue outlook came in below consensus expectations, while thee earnings outlook badly missed expectations. This is putting immense pressure on the share price on Tuesday.
Read the full article here
Dollar Tree (DLTR - Get Report) shares were being hammered on Tuesday, down 16.5% after the discount retailer reported a third-quarter earnings miss and issued disappointing guidance.
While shares rallied impressively ahead of the results, it proved to be a fake-out ahead of a painful post-earnings correction.
Should investors buy the dip? I wouldn't have a problem with buying Dollar Tree stock on this pullback if it weren't for all the far more attractive candidates in the retail sector. For instance, Best Buy (BBY - Get Report) and Burlington Stores (BURL - Get Report) were spiking on better-than-expected earnings on Tuesday. Target (TGT - Get Report) , Lowe's (LOW - Get Report) and Walmart (WMT - Get Report) all reported solid results too. I would feel more comfortable buying into strength and getting these names on pullbacks rather than getting long Dollar Tree stock on this earnings print.
Earnings of $1.08 a share missed expectations by 5 cents, while sales of $5.75 billion grew 3.8% year over year and eked past analysts' estimates. The sales and profit results weren't really the problem, as shares actually rallied in the premarket session on the headline results.
The midpoint of management's fourth-quarter revenue outlook came in below consensus expectations, while thee earnings outlook badly missed expectations. This is putting immense pressure on the share price on Tuesday.
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 latest earnings release? Based on Dollar Tree Inc. latest earnings report and their guidance provided for the fiscal year our valuation model provides a target price (full value price) for Dollar Tree stock at $89.50 a stock (up slightly from our 2nd quarter 2019 earnings report valuation of Dollar Tree). We therefore believe the stock of Dollar Tree is fully valued
Our valuation model target price for Dollar Tree Inc of $89.50 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 $89.50. A good entry point into Dollar Tree would therefore be at $80.50 or 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 $89.50 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 $89.50. A good entry point into Dollar Tree would therefore be at $80.50 or 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 4th quarter and full fiscal 2019 earnings report in late February 2020