Dollar Tree Q4 Earnings Preview: Strategic Initiatives, Supply Chain Costs In Focus – Dollar Tree (NASDAQ:DLTR)

Dollar Tree Inc (NASDAQ:DLTR) is reporting its fourth-quarter earnings on March 13. Wall Street expects $2.65 in EPS and $8.67 billion in revenues as the company reports before market hours.

After lagging for most of 2023, the stock picked up momentum in the fourth quarter. So far in the year 2024, the stock is up 4.75%. Being a discount retail store chain, macroeconomics has a big impact on this stock. Investors in the Dollar Tree stock must keep track of inflation and consumer sentiment as leading indicators of business performance.

As the company prepares to report its fourth quarter print, here’s what analysts from Telsey are focusing on.

Telsey Advisory Group analyst Joseph Feldman reiterated his Outperform rating on Dollar Tree stock with a price target of $160. This indicates an 8.04% upside from current price levels.

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Feldman’s investment thesis for Dollar Tree anticipates strong fourth quarter 2023 earnings driven by sustained demand at core Dollar Tree, despite relatively flat trends at Family Dollar. Factors that should contribute here include:

• The company’s value-priced assortment, appealing to cost-conscious consumers
• Strategic initiatives, including multiprice point products

Although store traffic moderation and negative High Single Digit (HSD) traffic at Family Dollar may impact results per Feldman, lower freight expenses and strategic initiatives are poised to enhance profitability.

“Looking at 2024, the company should start to see initial success from strategic initiatives and benefit from lower supply chain costs (EPS benefit of ~$1.00) and solid execution,” said Feldman.

Despite temporary headwinds like product mix and shrink, Family Dollar’s portfolio optimization and ongoing initiatives position the company for continued growth.

Initiative updates include:

• The expansion of multi-price products and frozen items
• Ongoing Family Dollar real estate strategy focused on remodeling and optimizing store portfolios

Overall, Dollar Tree emerges as a compelling investment opportunity with potential EPS of $10+ in 2026.

DLTR Price Action: Dollar Tree stock closed Monday up 0.74% at $149.

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