The discount stores seem to have slowing earnings, same stores yr over yr sales did not look good at FDO earlier this month. With 3700 shares, averaged in at $44.50, minus the call premiums I've collected, ( a violation of my ow rule regarding concentrading too much $$$ in one company) I'm getting concerned about DLTR's next report in Feb. A bad earnings number + guidance would be the next leg down to a new 52 week low IMO. My question to the board is this: Is the discount stores story done? Have they built out so many stores between DLTR, DG and FDO, as well as awaken the bigger retailers, that they're bound to see less impressive same store sales and will begin to cannibalize themselves? Is the story over, or are we just waiting for more income stressed households to continue the growth.
Optiontr8er, you are asking the wrong question/concerned about the wrong things.
Is dollar tree overvalued, fairly valued, or undervalued RIGHT NOW?
The answer is Dollar Tree is currently fairly valued for its CURRENT earnings. What this mans to the market is that Dollar Tree is not currently valued for its future, so it is "undervaued" in that sense and at soe point in the futree as earnings increase, the company will be worth more. So there will be yield to gain, but is it the best Yield in the market?
At its current price, no. It is trading at fairly valued s going foward, it is hard to expect this company to seek alpha and beat te market. Earnings need to catch up or the stock needs to come down. Until that happens, you will see DLTR underperform.
This is a great, wel-run company, and is poised to continue growing earnings going foward in our have/have-not society. But at this price, it is not compelling enough for people to dive fully in as the value is not there compared to other investmens. This comes down to 30, you will see buyers come in.This goes up, you will see selling into the spikes up.Fairly valued right now. 8 quarters from now at this price, DLTR will be cheap. Not dirt cheap, but cheap. 16 quarters from now at this price, bargain!
I think today's earnings confirm management's superior execution in the current environment. Sure it's not the best value, but the earnings call is allowing me to gain confidence in light of these headwinds... My previous short-term PT was about $44, but I think we could see momentum to $50 now. GL everyone.
I disagree about me asking the wrong questions. I don't mean to sound too sensitive here. The run this sector has had over the past 5-10yrs has been phenomenal. My mistake was merely greed. i sold boatloads of DLTR naked puts over the past several yrs and made a lot of money. I 3500 shares of the 3700 I own get put to me, never thinking hey's stay down this long. Of course I'm making income from the shares with calls but we're not used to the sector, specifically DLTR stay down this long. it has lead me to wonder, based on same stores sales growth weakness for DG, FDO and DLTR, have they built too many staores too fast. It seems Barron's published an article a few days ago, shortly after I raised the question. The writer of the article is of the opinion that thery have and now face canibalizing their own stores. That said, I'll pray I get them called at $45 after, and that will make me whole. good luck.