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Is Dollar Tree (DLTR) a Great Value Stock Right Now?

Zacks Equity Research
·2 min read

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Dollar Tree (DLTR). DLTR is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 18.79, which compares to its industry's average of 27.35. DLTR's Forward P/E has been as high as 20.89 and as low as 12.93, with a median of 17.82, all within the past year.

Investors should also note that DLTR holds a PEG ratio of 1.93. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DLTR's industry currently sports an average PEG of 2.95. Over the last 12 months, DLTR's PEG has been as high as 2.61 and as low as 1.22, with a median of 1.83.

Finally, we should also recognize that DLTR has a P/CF ratio of 12.71. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. DLTR's current P/CF looks attractive when compared to its industry's average P/CF of 26.53. Over the past 52 weeks, DLTR's P/CF has been as high as 15.84 and as low as 8.69, with a median of 12.35.

These are only a few of the key metrics included in Dollar Tree's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DLTR looks like an impressive value stock at the moment.


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