Dollar Tree Q3 Preview: Double-Digit Earnings Growth Inbound?

The Zacks Retail and Wholesale sector has primarily struggled in 2022, down more than 20% and underperforming the general market.

A titan in the realm, Dollar Tree, Inc. DLTR, is on deck to unveil quarterly earnings on November 22^nd, before the market open.

Dollar Tree operates discount variety stores offering merchandise and other assortments. Its stores successfully operate in major metropolitan areas, mid-sized cities, and small towns.

Currently, the retailer carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of a C.

How does everything else stack up heading into the release? Let’s take a closer look.

Share Performance & Valuation

DLTR shares have been a bright spot in an otherwise dim market in 2022, up more than 17% and crushing the S&P 500.

Image Source: Zacks Investment Research

Over the last month, DLTR shares have continued on their market-beating trajectory, up more than 10%.

Image Source: Zacks Investment Research

Dollar Tree shares currently trade at a 22.4X forward earnings multiple, well above the 18.7X five-year median but representing a 9% discount relative to the Zacks Retail and Wholesale sector.

The company sports a Style Score of a B for Value.

Image Source: Zacks Investment Research

Quarterly Estimates

Analysts have been bullish in their earnings outlook, with two positive earnings estimate revisions hitting the tape over the last several months. The Zacks Consensus EPS Estimate of $1.17 indicates a 22% Y/Y uptick in quarterly earnings.

Image Source: Zacks Investment Research

DLTR’s top-line appears to be in solid standing as well; the Zacks Consensus Sales Estimate of $6.8 billion suggests an improvement of more than 6% Y/Y.

Quarterly Performance

DLTR has consistently exceeded bottom-line estimates, chaining together 11 consecutive EPS beats. Just in its latest release, the retailer registered a 1.3% earnings surprise.

Sales results have come in under expectations consistently as of late; DLTR has fallen short of revenue estimates in four of its last five releases. Below is a chart illustrating the company’s revenue on a quarterly basis.

Image Source: Zacks Investment Research

Putting Everything Together

DLTR shares have been a bright spot in an otherwise dim market year-to-date, outperforming the general market across several timeframes.

The company’s forward earnings multiple sits above its five-year median and modestly below its Zacks sector average.

Analysts have been bullish regarding their earnings outlook, with estimates indicating Y/Y increases in both revenue and earnings.

Further, DLTR has consistently exceeded bottom-line estimates, but sales results have left some to be desired as of late.

Heading into the release, Dollar Tree DLTR carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of 6.3%.

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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 Nasdaq, Inc.