Dollar Tree Stock Down 18% Over A Week. What’s Next?

DLTR: Dollar Tree logo
Dollar Tree

Dollar Tree’s stock (NASDAQ: DLTR), which also owns Family Dollar, specializes in selling $1 items like toys, books, party supplies, and general discount items, declined by 18% in the last five trading days (one week). In comparison, the broader S&P500 index declined only 3% over the same period. The variety retail firm lowered its earnings guidance to $7.10 – $7.40 from $7.80 to $8.20 previously during its second-quarter earnings call. The company noted that its full-year outlook and margin performance are being hurt by inflationary cost pressures, a material shift in consumer purchasing from higher-margin discretionary merchandise to lower-margin consumable goods, and continued investments in wages, labor, and store condition. That said, the company’s consolidated full-year net sales are now expected to range from $27.9 billion to $28.1 billion, with slightly higher comps offset by slightly reduced square footage growth relative to the prior outlook.

Dollar Tree saw a mixed second quarter with revenues missing estimates by $30 million and earnings per share (EPS) coming in line. DLTR generated record EPS (up 30% year-over-year) of $1.60 on consolidated net sales of $6.8 billion (up 7% y-o-y). Comparable store net sales for Dollar Tree increased 7.5% and Family Dollar same-store sales increased 2.0%. It should be noted that gross margin improved 200 basis points to 31.4%, due to improved initial mark-on and leverage on distribution and occupancy costs. During the quarter, the company opened 127 new stores, expanded or relocated 29 stores, and closed 57 stores.

Is DLTR stock poised to decline in the short term or are gains looking more likely? Based on our machine learning analysis of trends in the stock price over the last ten years, there is more than a 90% chance of a rise in DLTR stock over the next month (twenty-one trading days). See our analysis of DLTR’s Stock Chance Of Rise for more details.

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Calculation of ‘Event Probability’ and ‘Chance of rising’ using last ten years’ data

[1] Returns of -18% or lower over a five-day period on 6 occasions out of 2512 (<1%); Stock rose in the next five days in 5 of these 6 instances (83%)

[2] Returns of -19% or lower over a ten-day period on 7 occasions out of 2512 (<1%); Stock rose in the next ten days in 6 of these 7 instances (86%)

[3] Returns of -18% or lower over a twenty-one-day period on 28 occasions out of 2512 (1%); Stock rose in the next twenty-one days in 26 of these 28 instances (93%)

It is helpful to see how its peers stack up. DLTR Peers shows how DLTR stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

Despite inflation rising and the Fed raising interest rates, DLTR stock has fallen marginally this year. Can it drop more? See how low can DLTR stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Aug 2022
MTD [1]
YTD [1]
Total [2]
 DLTR Return -17% -2% 78%
 S&P 500 Return -3% -16% 79%
 Trefis Multi-Strategy Portfolio -3% -16% 235%

[1] Month-to-date and year-to-date as of 8/30/2022
[2] Cumulative total returns since the end of 2016

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