Critical Review: Dollar Tree (DLTR) versus Its Peers

Dollar Tree (NASDAQ: DLTR) is one of 12 public companies in the “Variety stores” industry, but how does it compare to its competitors? We will compare Dollar Tree to similar businesses based on the strength of its risk, analyst recommendations, earnings, dividends, valuation, institutional ownership and profitability.

Volatility & Risk

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Dollar Tree has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, Dollar Tree’s competitors have a beta of 0.89, meaning that their average share price is 11% less volatile than the S&P 500.

Valuation and Earnings

This table compares Dollar Tree and its competitors revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Dollar Tree $22.25 billion $1.71 billion 20.07
Dollar Tree Competitors $65.92 billion $1.74 billion 21.78

Dollar Tree’s competitors have higher revenue and earnings than Dollar Tree. Dollar Tree is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Dollar Tree and its competitors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dollar Tree 7.71% 18.68% 7.28%
Dollar Tree Competitors 3.76% 15.00% 6.64%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Dollar Tree and its competitors, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dollar Tree 0 6 22 1 2.83
Dollar Tree Competitors 163 1266 1707 91 2.53

Dollar Tree currently has a consensus price target of $108.95, indicating a potential upside of 11.67%. As a group, “Variety stores” companies have a potential upside of 2.91%. Given Dollar Tree’s stronger consensus rating and higher probable upside, equities analysts plainly believe Dollar Tree is more favorable than its competitors.

Institutional and Insider Ownership

90.9% of Dollar Tree shares are held by institutional investors. Comparatively, 76.1% of shares of all “Variety stores” companies are held by institutional investors. 2.9% of Dollar Tree shares are held by company insiders. Comparatively, 13.8% of shares of all “Variety stores” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Dollar Tree beats its competitors on 8 of the 13 factors compared.

Dollar Tree Company Profile

Dollar Tree, Inc. operates discount variety retail stores in the United States and Canada. It operates through two segments, Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at the fixed price of $1.00. It provides consumable merchandise, including candy and food, and health and beauty care products, as well as everyday consumables, such as household paper and chemicals, and frozen and refrigerated food; various merchandise comprising toys, durable housewares, gifts, stationery, party goods, greeting cards, softlines, and other items; and seasonal goods, which include Valentine's Day, Easter, Halloween, and Christmas merchandise. This segment operates 6,650 stores under the Dollar Tree and Dollar Tree Canada brands, as well as 11 distribution centers in the United States and 2 in Canada, and a store support center in Chesapeake, Virginia. The Family Dollar segment operates general merchandise discount retail stores that offer consumable merchandise, which comprise food, tobacco, health and beauty aids, household chemicals, paper products, hardware and automotive supplies, diapers, batteries, and pet food and supplies; and home products, including housewares, home décor, and giftware, as well as domestics, such as comforters, sheets, and towels. It also provides apparel and accessories merchandise comprising clothing, fashion accessories, and shoes; and seasonal and electronics merchandise, which include Valentine's Day, Easter, Halloween, and Christmas merchandise, as well as personal electronics that comprise pre-paid cellular phones and services, stationery and school supplies, and toys. This segment operates 8,185 stores under the Family Dollar brand, 11 distribution centers, and a store support center in Matthews, North Carolina. Dollar Tree, Inc. was founded in 1986 and is headquartered in Chesapeake, Virginia.

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