Valued at a market cap of $15.1 billion, Dollar Tree, Inc. (DLTR) operates discount variety stores under the Dollar Tree and Family Dollar brands. The Chesapeake, Virginia-based company offers a wide range of affordable merchandise, including consumables, household items, seasonal goods, and apparel, with Dollar Tree stores featuring a fixed price of $1.25.
Companies valued at $10 billion or more are generally classified as “large-cap” stocks, and Dollar Tree fits this criterion perfectly. Supported by a nationwide logistics network and distribution centers, it serves major metropolitan areas, mid-sized cities, and small towns across the United States and Canada. Additionally, Dollar Tree's e-commerce platform, DollarTree.com, sells merchandise in bulk and promotes in-store events and seasonal promotions.
However, the discount retailer pulled back 54.1% from its 52-week high of $151.21, recorded in March. Shares of Dollar Tree have declined 5.5% over the past three months, lagging behind the Consumer Staples Select Sector SPDR Fund’s (XLP) 2.4% decrease over the same time frame.
In the long term, DLTR stock is down 51.1% on a YTD basis, significantly underperforming XLP’s 13% rise. Moreover, shares of Dollar Tree have dipped 46.9% over the past 52 weeks, compared to XLP’s 14.3% return over the same time frame.
DLTR stock has been trading below its 50-day and 200-day moving averages since early March. However, the stock has climbed above its 50-day moving average since late November.
Shares of Dollar Tree rose 1.9% on Dec. 4 due to its robust Q3 fiscal 2024 performance, which exceeded expectations. The company reported adjusted EPS of $1.12 and adjusted revenue of $7.6 billion, both surpassing the consensus estimates. Strong enterprise same-store sales growth of 1.8%, driven by increased traffic and ticket size across Dollar Tree and Family Dollar banners, further boosted investor confidence. Additionally, Dollar Tree raised its fiscal 2024 net sales guidance to $30.7 billion - $30.9 billion, boosting investor confidence.
Nevertheless, rival PriceSmart, Inc. (PSMT) is outperforming DLTR. Shares of PriceSmart have gained 26.4% over the past 52 weeks and 23.8% on a YTD basis.
Despite DLTR’s weak price action, analysts are moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 24 analysts covering the stock, and as of writing, DLTR is trading below the mean price target of $82.91.
