Would You Still Hold Dollar Tree Stock If It Fell Another 30%?
Dollar Tree (DLTR) stock is down 8.1% in 5 trading days. The recent slide reflects renewed concerns around its BMO downgrade, traffic decline, and Family Dollar divestiture impacts, but sharp drops like this often raise a tougher question: is the weakness temporary, or a sign of deeper cracks in the story?
Before judging its downturn reslience, let’s look at where Dollar Tree stands today.
- Size: Dollar Tree is a $24 Bil company with $19 Bil in revenue currently trading at $119.88.
- Fundamentals: Last 12 month revenue growth of 156.4% and operating margin of 7.9%.
- Liquidity: Has Debt to Equity ratio of 0.31 and Cash to Assets ratio of 0.04
- Valuation: Dollar Tree stock is currently trading at P/E multiple of -8.3 and P/EBIT multiple of 15.4
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 51.5% within a year. See DLTR Dip Buy Analysis.
These metrics point to a Moderate operational performance, alongside Moderate valuation – making the stock Fairly Priced. For details, see Buy or Sell DLTR Stock
That brings us to the key consideration for investors worried about this fall: how resilient is DLTR stock if markets turn south? This is where our downturn resilience framework comes in. Suppose DLTR stock falls another 20-30% to $84 – can investors comfortably hold on? Turns out, the stock saw an impact slightly worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.
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2022 Inflation Shock
- DLTR stock fell 40.5% from a high of $174.08 on 20 April 2022 to $103.64 on 3 October 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $150.02 on 7 March 2024 , and currently trades at $119.88
| DLTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -40.5% | -25.4% |
| Time to Full Recovery | Not Fully Recovered | 464 days |
2020 Covid Pandemic
- DLTR stock fell 30.3% from a high of $94.05 on 1 January 2020 to $65.57 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 28 May 2020
| DLTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -30.3% | -33.9% |
| Time to Full Recovery | 71 days | 148 days |
2018 Correction
- DLTR stock fell 31.7% from a high of $116.35 on 29 January 2018 to $79.51 on 11 October 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 15 October 2019
| DLTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -31.7% | -19.8% |
| Time to Full Recovery | 369 days | 120 days |
2008 Global Financial Crisis
- DLTR stock fell 53.3% from a high of $15.19 on 6 June 2007 to $7.10 on 15 January 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 2 June 2009
| DLTR | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -53.3% | -56.8% |
| Time to Full Recovery | 504 days | 1,480 days |
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