What Are Analysts Saying About Dollar Tree Inc’s (NASDAQ:DLTR) Growth?
The most recent earnings update Dollar Tree Inc’s (NASDAQ:DLTR) released in February 2018 showed that the business gained from a large tailwind, leading to a high double-digit earnings growth of 91.29%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Dollar Tree’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings. View our latest analysis for Dollar Tree
Analysts’ outlook for this coming year seems pessimistic, with earnings declining by a double-digit -21.39%. Over the medium term, earnings are predicted to continue to be below today’s level, with a decline of -11.48% in 2020, eventually reaching US$1.52B in 2021.
While it’s informative knowing the growth year by year relative to today’s level, it may be more valuable determining the rate at which the business is moving every year, on average. The advantage of this technique is that it ignores near term flucuations and accounts for the overarching direction of Dollar Tree’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 0.86%. This means, we can presume Dollar Tree will grow its earnings by 0.86% every year for the next few years.
Next Steps:
For Dollar Tree, I’ve compiled three essential aspects you should look at:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is DLTR worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DLTR is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of DLTR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
