Comparing Dollar Tree (DLTR) & Target (TGT)

Dollar Tree (NASDAQ: DLTR) and Target (NYSE:TGT) are both large-cap retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, risk, valuation, dividends and profitability.

Volatility and Risk

Dollar Tree has a beta of 0.79, indicating that its share price is 21% less volatile than the S&P 500. Comparatively, Target has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Dollar Tree and Target, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dollar Tree 0 9 18 1 2.71
Target 1 11 8 0 2.35

Dollar Tree presently has a consensus target price of $105.91, suggesting a potential upside of 24.59%. Target has a consensus target price of $74.47, suggesting a potential downside of 2.17%. Given Dollar Tree’s stronger consensus rating and higher probable upside, equities analysts plainly believe Dollar Tree is more favorable than Target.

Profitability

This table compares Dollar Tree and Target’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dollar Tree 7.44% 18.23% 7.62%
Target 4.09% 23.34% 6.75%

Earnings & Valuation

This table compares Dollar Tree and Target’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dollar Tree $22.25 billion 0.91 $1.71 billion $4.86 17.49
Target $71.88 billion 0.56 $2.93 billion $4.71 16.16

Target has higher revenue and earnings than Dollar Tree. Target is trading at a lower price-to-earnings ratio than Dollar Tree, indicating that it is currently the more affordable of the two stocks.

Dividends

Target pays an annual dividend of $2.48 per share and has a dividend yield of 3.3%. Dollar Tree does not pay a dividend. Target pays out 52.7% of its earnings in the form of a dividend. Target has raised its dividend for 50 consecutive years.

Insider and Institutional Ownership

91.4% of Dollar Tree shares are owned by institutional investors. Comparatively, 85.4% of Target shares are owned by institutional investors. 1.5% of Dollar Tree shares are owned by company insiders. Comparatively, 0.2% of Target shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Dollar Tree beats Target on 13 of the 18 factors compared between the two stocks.

About Dollar Tree

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.

About Target

Target Corporation operates as a general merchandise retailer in the United States. The company offers beauty and household essentials, including beauty products, personal and baby care products, cleaning products, paper products, and pet supplies; food and beverage products, such as dry grocery, dairy, frozen food, beverage, candy, snacks, deli, bakery, meat, and produce products; and apparel for women, men, boys, girls, toddlers, infants, and newborns, as well as intimate apparel, jewelry, accessories, and shoes. It also provides home furnishings and décor comprising furniture, lighting, kitchenware, small appliances, home décor, bed and bath products, home improvement products, and automotive products, as well as seasonal merchandise comprising patio furniture and holiday décor; and music, movies, books, computer software, sporting goods, and toys, as well as electronics that include video game hardware and software. In addition, the company offers in-store amenities, which comprise Target Café, Target Optical, Starbucks, and other food service offerings. It sells its products through its stores; and digital channels, including Target.com. As of March 8, 2018, the company operated 1,826 stores. Target Corporation was founded in 1902 and is headquartered in Minneapolis, Minnesota.

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