Dollar Tree, Inc. DLTR is likely to register top and bottom-line declines when it reports fourth-quarter fiscal 2024 results on March 26. The Zacks Consensus Estimate for revenues is pegged at $8.2 billion, indicating a drop of 4.7% from the prior-year quarter’s figure.

The consensus estimate for earnings is pegged at $2.18 per share, indicating a decrease of 14.5% from the year-ago period’s figure. The consensus mark has been stable in the past 30 days.
 
The company has a trailing four-quarter negative earnings surprise of 8.7%, on average. In the last reported quarter, the Chesapeake, VA-based company’s earnings beat the Zacks Consensus Estimate by 4.7%.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Trends to Watch Before Dollar Tree’s Release

Dollar Tree’s fourth-quarter results are expected to reflect continued pressures from soft demand for discretionary items owing to reduced spending trends among low-income consumers. Additionally, the company has been facing headwinds related to inflationary pressures and increased interest rates. Adverse foreign currency translations also continue to act as deterrents. 

The company has been witnessing higher selling, general and administrative (SG&A) expenses for a while, owing to elevated operating costs. These factors are expected to have collectively marred the top and bottom lines in the fiscal fourth quarter. 

On the last reported quarter’s earnings call, management had expected consolidated net sales to be in the band of $8.1-$8.3 billion. Adjusted earnings per share (EPS) are likely to be $2.10-$2.30. We expect an increase of 90 basis points for the fiscal fourth quarter.

On the positive front, DLTR is expected to have displayed continued progress on its restructuring and expansion initiatives, driven by steady store openings and the improvement of distribution centers, which is likely to have partly cushioned revenues. DLTR’s progress on optimizing its store portfolio through store openings, renovations, re-banners and closings bodes well. 

For the fiscal fourth quarter, management had predicted comps growth in the low-single-digits for the enterprise and both the Dollar Tree and Family Dollar segments. Our model predicts year-over-year enterprise comps growth of 1.8% for the fiscal fourth quarter, with a 1.7% increase in comps for the Dollar Tree banner and 1.9% Family Dollar comps.

Dollar Tree’s Zacks Model Findings

Our proven model does not conclusively predict an earnings beat for Dollar Tree this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Dollar Tree has an Earnings ESP of -1.19% and a Zacks Rank of 3.

DLTR’s Stock Price & Valuation Picture

From a valuation perspective, Dollar Tree shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 10.59X, below the five-year median of 17.88X and the Retail-Discount Stores industry’s average of 29.54X, the company’s shares offer compelling value for investors seeking exposure to the sector. Additionally, the stock currently has a Value Score of B, further validating its appeal.

Recent market movements show that Dollar Tree’s shares have lost 9.4% in the past six months compared with the industry’s 5% decline.

Stocks With the Favorable Combination

Here are some companies, which according to our model, have the right combination of elements to post an earnings beat:

Chewy CHWY presently has an Earnings ESP of +15.66% and a Zacks Rank 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is likely to register growth in the top and bottom lines when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for CHWY’s quarterly revenues is pegged at $3.2 billion, which indicates 13.1% growth from the prior-year quarter. 

The consensus mark for Chewy’s quarterly earnings has moved up a penny in the past seven days to 21 cents per share. The consensus estimate indicates growth of 16.7% from the year-ago quarter.

Fastenal FAST currently has an Earnings ESP of +0.48% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports first-quarter 2025 results. The consensus mark for FAST’s quarterly revenues is pegged at $1.9 billion, which indicates growth of 2.5% from the prior-year quarter.

The Zacks Consensus Estimate for Fastenal’s earnings has been unchanged at 52 cents per share in the past 30 days. The consensus estimate remains flat year over year.

lululemon athletica LULU currently has an Earnings ESP of +0.05% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2024 results. The consensus mark for LULU’s quarterly revenues is pegged at $3.6 billion, which indicates growth of 11.6% from the prior-year quarter.

The Zacks Consensus Estimate for LULU’s earnings has been stable at $5.85 per share in the past 30 days. The consensus estimate indicates a 10.6% increase from the year-ago quarter’s figure.

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This article originally published on Zacks Investment Research (zacks.com).

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