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Should Investors Chase the Rally in Dollar Tree (DLTR) Stock After Q4 Earnings?
DLTRDollar Tree(DLTR) ZACKS·2025-03-27 23:30

Core Viewpoint - Dollar Tree's shares have increased by 13% following the announcement of the sale of its Family Dollar business for 1.01billion,despitemissingbothsalesandearningsexpectationsinQ4[1][2].Group1:Q4Results−DollarTreereportedQ4salesof1.01 billion, despite missing both sales and earnings expectations in Q4 [1][2]. Group 1: Q4 Results - Dollar Tree reported Q4 sales of 4.99 billion, down from 8.63billioninthesamequarterlastyear,andmissedestimatesof8.63 billion in the same quarter last year, and missed estimates of 8.23 billion [2]. - The company posted Q4 EPS of 2.11,whichwasbelowexpectationsof2.11, which was below expectations of 2.18 and down from 2.55pershareayearago[2][3].−TheaveragesurpriseforthereportedEPSwas−3.212.55 per share a year ago [2][3]. - The average surprise for the reported EPS was -3.21% for Q4 [3]. Group 2: Full-Year Results & Guidance - For fiscal year 2025, Dollar Tree's total sales fell 10% to 27.56 billion compared to 30.6billioninFY24,withannualearningsdown1330.6 billion in FY24, with annual earnings down 13% to 5.10 per share from 5.89inFY24[3].−ThecompanyexpectsQ1salestobeintherangeof5.89 in FY24 [3]. - The company expects Q1 sales to be in the range of 4.5-4.6billion,significantlylowerthan4.6 billion, significantly lower than 7.63 billion in the prior year quarter, with projected Q1 EPS between 1.10−1.10-1.25, below the Zacks Consensus of 1.46[4].−ForFY26,DollarTreeprojectstotalsalesof1.46 [4]. - For FY26, Dollar Tree projects total sales of 18.5-19.1billionandEPSof19.1 billion and EPS of 5.00-5.50,whichisbelowtheZacksConsensusof5.50, which is below the Zacks Consensus of 5.94 [5]. Group 3: Analyst Reactions and Price Targets - Analysts have begun to raise their price targets for Dollar Tree following the sale of Family Dollar, with the current Average Zacks Price Target at $81.26, suggesting a 17% upside [7]. - The sale is expected to reduce operating costs, potentially leading to improved profitability in the future [8]. Group 4: Stock Performance - Following the earnings report, Dollar Tree stock has received a Zacks Rank of 3 (Hold), indicating a cautious outlook despite the recent rally [8].