Should Investors Chase the Rally in Dollar Tree (DLTR) Stock After Q4 Earnings?

Core Viewpoint - Dollar Tree's shares have increased by 13% following the announcement of the sale of its Family Dollar business for $1.01 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 $8.63 billion in the same quarter last year, and missed estimates of $8.23 billion [2]. - The company posted Q4 EPS of $2.11, which was below expectations of $2.18 and down from $2.55 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 $30.6 billion in FY24, with annual earnings down 13% to $5.10 per share from $5.89 in FY24 [3]. - The company expects Q1 sales to be in the range of $4.5-$4.6 billion, significantly lower than $7.63 billion in the prior year quarter, with projected Q1 EPS between $1.10-$1.25, below the Zacks Consensus of $1.46 [4]. - For FY26, Dollar Tree projects total sales of $18.5-$19.1 billion and EPS of $5.00-$5.50, 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].