Will Dollar Tree (DLTR) Miss Earnings Estimates? - Analyst Blog

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Dollar Tree, Inc. ( DLTR ), operator of discount variety stores, is slated to report its first-quarter fiscal 2014 results on May 22, 2014. In the last quarter, it posted a negative surprise of 2.86%. Let's see how things are shaping up for this announcement.

Factors Influencing This Quarter

The disappointing fourth-quarter fiscal 2013 results put the company on the back foot. The adverse weather conditions locked consumers indoor, while the soft economic recovery compelled management to take a cautious stance while providing sales and earnings guidance for the first quarter. Margins are also expected to remain under pressure.

Earnings Whispers?

Our proven model does not conclusively show that Dollar Tree is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Negative Zacks ESP: ESP for Dollar Tree is -1.49%. This is because the Most Accurate estimate stands at 66 cents, while the Zacks Consensus Estimate is pegged at 67 cents a share.

Zacks Rank: Dollar Tree's Zacks Rank #4 (Sell) lowers the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements:

The Kroger Co. ( KR ) has an Earnings ESP of +0.95% and a Zacks Rank #2 (Buy).

Lions Gate Entertainment Corp. ( LGF ) has an Earnings ESP of +7.69% and a Zacks Rank #3 (Hold).

Best Buy Co., Inc. ( BBY ) has an Earnings ESP of +10.53% and a Zacks Rank #3 (Hold).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: BBY , DLTR , KR , LGF

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