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Dollar Tree (DLTR) Q2 Earnings in Focus: Factors to Note

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·3 min read
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Dollar Tree, Inc. DLTR is likely to register an increase in the top line when it reports second-quarter fiscal 2021 results on Aug 26, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $6,451 million, indicating an improvement of 2.8% from the prior-year quarter.

However, the bottom line of this operator of discount variety retail stores is expected to decrease year over year. The Zacks Consensus Estimate for second-quarter earnings has decreased by a penny to $1.03 over the past seven days. The figure suggests a decline from $1.10 reported in the year-ago period.

The company has a trailing four-quarter earnings surprise of 14.8.%, on average. In the last reported quarter, this Chesapeake, VA-based company outperformed the Zacks Consensus Estimate by a margin of 14.3%.

Key Factors to Note

Dollar Tree Plus! multi-price initiative, digital and omni-channel endeavors, same day delivery service with Instacart and introduction of Chesapeake Media Group to drive traffic are likely to have favorably impacted second-quarter performance. The company’s store rationalization and renovation efforts, backed by the success of the H2 program, Crafter’s Square and Combination store format are expected to have driven the to-be-reported quarter’s top line.

Industry experts believe that discretionary category, including apparel, home décor, beauty care and floral is likely to have performed well. The discretionary mix as a percentage of net sales had increased 710 basis points to 52.3% in the last reported quarter. The company has been also witnessing encouraging results at stores that added fresh produce and frozen meats to their assortment.

Clearly, aforementioned factors instill optimism regarding the outcome of the results. However, margins still remain an area to watch. Impact of costs associated with digital fulfilment, supply chain and COVID-19 related expenses cannot be ruled out. Higher freight cost may have impacted the second-quarter performance.

Dollar Tree, Inc. Price, Consensus and EPS Surprise

Dollar Tree, Inc. Price, Consensus and EPS Surprise
Dollar Tree, Inc. Price, Consensus and EPS Surprise

Dollar Tree, Inc. price-consensus-eps-surprise-chart | Dollar Tree, Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict a beat for Dollar Tree this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dollar Tree has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.10%.

3 Stocks With a Favorable Combination

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat.

Burlington Stores BURL has an Earnings ESP of +15.26% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ulta Beauty ULTA has an Earnings ESP of +17.59% and a Zacks Rank #2.

Costco COST has an Earnings ESP of +0.44% and a Zacks Rank #3.


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Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report

Burlington Stores, Inc. (BURL) : Free Stock Analysis Report

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