Dollar Tree Pre-Q4 Earnings: Is It Likely to Surpass Estimates?

Dollar Tree, Inc. DLTR is likely to register a decline in its top line when it reports fourth-quarter fiscal 2025 results on March 16, before market open. The Zacks Consensus Estimate for revenues is pegged at $5.5 billion, indicating a drop of 33.8% from the prior-year quarter’s reported figure.The consensus estimate for earnings is pegged at $2.53 per share, indicating an increase of 19.9% from the year-ago period’s reported figure. The consensus mark has moved up by a penny in the past seven days.For fiscal 2025, the Zacks Consensus Estimate for revenues is pegged at $19.4 billion, indicating a decline of 37% from the prior-year quarter’s actual. The consensus estimate for earnings is pegged at $5.73 per share, indicating an increase of 12.4% from the year-ago period’s reported figure. The consensus mark has moved up by a penny in the past seven days.DLTR has a trailing four-quarter earnings surprise of 29.1%, on average. In the last reported quarter, the Chesapeake, VA-based company’s earnings surpassed the Zacks Consensus Estimate by 11%.Trends to Watch Before Dollar Tree’s Q4 ReleaseDLTR entered the fiscal fourth quarter with solid operating momentum. The company is expected to have witnessed strong performance, driven by sales growth across categories and market share gains. Dollar Tree has made significant progress over the years in optimizing its store portfolio through store openings, renovations, re-banners and closings. The expanded multi-price assortment, continued strength from higher-income customers and a healthy balance between traffic and ticket continue to support comps growth. Strong performance from store conversions, openings, improved distribution center flow and the early traction of the Uber Eats partnership should have provided incremental support to fourth-quarter fiscal 2025 revenues.On the last reported quarter’s earnings call, management is encouraged by the robust trends on value proposition and multi-price efforts. It is confident of its ability to mitigate the tough environment and accomplish profitability goals for the fiscal year.For the fourth quarter of fiscal 2025, the company projects net sales of $5.4-$5.5 billion, supported by expected comparable-store sales growth of 4-6%. Adjusted EPS is anticipated to be $2.40-$2.60. The fiscal fourth quarter is the company’s highest cash-generating quarter, owing to generally higher sales levels.For fiscal 2025, the company projects net sales of $19.35-$19.45 billion, supported by comps growth of 5-5.5%. Adjusted EPS is projected to be $5.60-$5.80. Our model predicts comps growth of 5.1% for the fourth quarter and 5.3% for fiscal 2025. Dollar Tree, Inc. Price and EPS Surprise  Dollar Tree, Inc. price-eps-surprise | Dollar Tree, Inc. QuoteHowever, Dollar Tree’s fourth-quarter fiscal 2025 results are expected to reflect the environment of uncertainty that management emphasized on the latest earnings call. Despite strong discretionary and consumable spending in the fiscal third quarter, management has taken a cautious stance, given the volatile macroeconomic backdrop and rising financial pressures on lower-income consumers, who continue to face elevated living costs across categories.A major factor weighing on the company’s performance is likely to have been the timing of tariff impacts. Tariff-related pressures have been leading to higher costs and remain concerning. The company’s fiscal 2025 outlook assumed unchanged tariff levels in the near term. However, gross margin expansion is expected to have been offset by higher tariff expenses, increased markdowns and elevated shrink levels.Our model predicts gross profit to increase 12.1% for the fourth quarter and 11.9% for fiscal 2025. The gross margin is expected to expand 100 bps and 50 bps year over year, respectively, for the fourth quarter and fiscal 2025. Dollar Tree has been witnessing higher selling, general and administrative (SG&A) expenses for a while, driven by elevated depreciation expenses from store investments, increased store payroll from pricing initiatives and higher wages, and general liability claims. We expect adjusted SG&A expenses to increase 17% for the fourth quarter and 15.4% for fiscal 2025.Dollar Tree’s Zacks Model FindingsOur proven model conclusively predicts an earnings beat for Dollar Tree this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is exactly the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.Dollar Tree currently has an Earnings ESP of +2.38% and a Zacks Rank of 3.DLTR’s Stock Price & Valuation PictureFrom a valuation perspective, Dollar Tree shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 17.23X, below the five-year median of 18X and the Retail-Discount Stores industry’s average of 33.34X, the company’s shares offer compelling value for investors seeking exposure to the sector. Image Source: Zacks Investment Research Recent market movements show that Dollar Tree’s shares have declined 10% in the past three months against the industry’s 10.7% growth. Image Source: Zacks Investment Research Other Stocks With the Favorable CombinationHere are some companies, which, according to our model, have the right combination of elements to post an earnings beat this season:Five Below, Inc. FIVE has an Earnings ESP of +0.63% and currently sports a Zacks Rank of 1. FIVE is likely to register top and bottom-line increases when it reports fourth-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $1.71 million, indicating a 22.9% rise from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here. The consensus estimate for Five Below’s earnings is pegged at $3.99 per share, implying a 14.7% increase from the year-ago quarter. FIVE delivered a trailing four-quarter earnings surprise of 62.1%, on average.Ulta Beauty, Inc. ULTA has an Earnings ESP of +6.45% and a Zacks Rank #3 at present. The consensus estimate for Ulta Beauty’s fourth-quarter fiscal 2025 earnings is pegged at $7.99 per share, implying a decline of 5.6% from the year-ago quarter’s actual.  For Ulta Beauty’s quarterly revenues, the consensus mark is pegged at $3.83 billion, which indicates an increase of 9.9% from the year-ago quarter’s reported figure. ULTA delivered a trailing four-quarter earnings surprise of 15.7%, on average.Dollar General DG has an Earnings ESP of +5.38% and a Zacks Rank #3 at present. The Zacks Consensus Estimate for revenues is pegged at $10.8 billion, implying 4.7% growth from the year-ago quarter’s actual.The consensus estimate for Dollar General earnings is pegged at $1.61 per share, implying a 4.2% decline from the year-ago quarter’s reported number. DG delivered a trailing four-quarter earnings surprise of 22.9%, on average.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. 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(FIVE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks