Dollar Tree (NASDAQ:DLTR) will release its first-quarter results before the market opens on Wednesday, June 5. The company’s affordable offerings, especially at a time when customers are looking for cheaper products due to high inflation, come as an advantage.
DLTR continues to attract customers with its low-priced offerings. The company has been undertaking strategic initiatives, such as the optimization of its store portfolio. As part of its store portfolio review, the company aims to open 2,000 new stores in 2024 while also planning to close a few stores over the coming years.
DLTR is a discount retail chain offering a wide variety of products, all priced at one dollar or less.
DLTR – Q1 Expectations
Wall Street expects Dollar Tree to report sales of $7.63 billion in Q1, up 4.2% year-over-year. Meanwhile, analysts expect DLTR to post earnings of $1.43 per share, compared with $1.47 in the prior-year quarter.
Looking at management’s expectations, Q1 sales are expected to come between $7.6 billion and $7.9 billion. Also, the company expects its adjusted EPS to be in the range of $1.33 to $1.48.
Analysts are Bullish Ahead of Q1
Prior to the company’s Q1 earnings release, four analysts rated Dollar Tree stock a Buy.
Top-rated analyst Paul Lejuez from Citi believes that DLTR has the potential for continued growth owing to its strategic initiatives. Furthermore, Lejuez noted an increase in Family Dollar’s store traffic and expects further improvement in the near term.
On May 21, Lejuez reiterated his Buy rating on DLTR stock, with a price target of $163, suggesting a 34.7% upside potential. (To watch Lejuez’s track record, click here).
Is DLTR a Buy?
Overall, Wall Street is cautiously optimistic about the stock. Dollar Tree has a Moderate Buy consensus rating based on 13 Buy, five Hold, and one Sell recommendations. The analysts’ average price target on DLTR stock of $152.33 suggests an upside of 25.91%. Shares of the company have declined 15% year-to-date.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry; the Options tool does this for you. Indeed, it currently says that options traders are expecting a large 10.22% move in either direction.
Concluding Thoughts
The company has been undertaking restructuring initiatives, including optimization of its store portfolio through new store openings, renovations, and closings. This is expected to drive DLTR’s performance going forward.
