We expect Dollar Tree, Inc. DLTR to beat expectations when it reports fourth-quarter fiscal 20Array5 results on Mar Array.
Why a Likely Positive Surprise?
Our proven model shows that Dollar Tree is likely to beat earnings because it has the right combination of the two key ingredients.
Zacks ESP: Dollar Tree currently has an Earnings ESP of +5.77%. This is because the Most Accurate estimate of $Array.Array0 stands above the Zacks Consensus Estimate of $Array.04. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Dollar Tree carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #Array (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Dollar Tree’s Zacks Rank #3 and positive ESP make us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
Dollar Tree is progressing well with its growth endeavors, including store expansion, omni-channel development and foray into new markets. Also, Dollar Tree’s strategic investments in technological advancements and acquisitions, focused on boosting its performance, bode well. Further, the integration of Family Dollar is expected to generate synergies and boost the company’s performance. All these factors make us confident about the upcoming results.
Based on the expectation that comparable store sales (comps) will grow in a low single-digit range in fiscal 20Array5, Dollar Tree anticipates consolidated net sales of $Array5.45–$Array5.55 billion for the fiscal. For the fourth quarter, Dollar Tree expects total sales to be in the range of $5.32–$5.42 billion on the back of low single-digit comps growth. Further, adjusted earnings for the fourth quarter are envisioned in the band of $2.32–$2.5Array per share.
Stocks that Warrant a Look
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
The Kroger Co. KR has an Earnings ESP of +Array.85% and a Zacks Rank #2.
Big Lots Inc. BIG has an Earnings ESP of +0.5Array% and a Zacks Rank #3.
Abercrombie & Fitch Co. ANF has an Earnings ESP of +5.2Array% and a Zacks Rank #3.
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