Dollar Tree Inc. (NASDAQ: DLTR) released its fiscal Q4 2022 earnings and revenue report on Wednesday, March 2, 2022, in which it missed sales estimates but topped earnings estimates.
What to look for: The company reported mixed earnings results in Q4 2022, topping earnings estimates but coming short of sales estimates. In addition, dollar Tree issued a weaker than anticipated outlook for the first quarter with low single-digit growth in same-store sales. In November, the company indicated that it would add a $1.25 price point for all its stores nationally and that it had finalized rollout at all US stores in January. This move comes as most retailers contend with growing inflation, higher wages, and high freight costs. Since last year, the company has been a target for activist investors and has been struggling with the integration of Family Dollar since its acquisition.
Earnings:Stockearning’s Estimated EPS for the fourth quarter was pegged at $1.79 per share, but the company produced an earnings surprise of 12.29% with $2.13 per share. A quarter ago, the discount retailer had expected to report earnings of $0.95 but produced an earnings surprise of 1.05% with earnings of $0.96. For the coming quarter, the consensus earnings estimate is pegged at $1.62, and for the current fiscal year, the company expects earnings of $7.38 per share. Historical EPS performance shows that the company has, in the past 12 quarters, topped earnings estimates 19 times, (47%) matched once (2%), and missed 20 times (50%).
Revenue: The company reported revenue of $7.08 billion for the quarter ending January 2022, missing consensus estimates by 0.69%. A year ago, the company had revenue of $6.77 billion. For the coming quarter, the company is anticipating revenue of 6.78 billion and revenues of $27.84 for the current fiscal year.
Stock Movement: DLTR shares have gained 5.4 % since the company released its last earnings release. Interestingly, following the earnings release, the company’s shares have been UP 29 times in the past 48 quarters. So, the historical price reaction suggests a 60% probability of the share price going UP following the earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-6%, while the predicted volatility on the seventh day is +/-6%.
What analysts are saying: BMO Capital Markets analyst Kelly Bania upgraded the stock’s shares from Hold to Buy and raised the price target from $155 to $170. Bania stated that the market is underestimating the higher price points, which could help the company's gross margins, and thus full, year earnings are likely to be higher than anticipated.
Deutsche Bank analyst Kristina Katai raised the stock’s price target from $171 to $176 and maintained a Buy rating in the shares. The analyst indicated that she expected the company to post inline results for the first quarter in the discounter sector.
JPMorgan analyst Matthew Boss raised DLTR’s price target from $169 to $181 and maintained a Buy rating on the stock. Boss told investors in a research note that the retirement announcement of Bob Sasse clears the way for a possible settlement between the company and activity investor Mantle Ridge before the annual shareholder meeting in June.
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