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On Wednesday, Truist Securities updated its outlook on Dollar Tree shares (NASDAQ:DLTR), with analyst Scot Ciccarelli increasing the price target to $84 from the previous $76, while reaffirming a Buy rating on the stock. According to InvestingPro data, the stock appears undervalued, with analyst targets ranging from $70 to $105. Ciccarelli highlighted Dollar Tree’s strong sales momentum and the company’s expectation of 3%-5% comparable store sales growth, which he noted is a better rate than most competitors, supported by the company’s 5.2% revenue growth over the last twelve months.
The analyst pointed out that Dollar Tree is currently bearing the full corporate expense burden for two companies, which is anticipated to decrease over time. Additionally, the expected sale of Family Dollar is projected to provide Dollar Tree with cash inflow, tax advantages, and the opportunity for the team to concentrate on a single business. InvestingPro analysis shows the company maintains a healthy current ratio of 1.03 and strong cash flows that adequately cover interest payments.
Ciccarelli also mentioned the positive outcomes from recent investments, particularly the Dollar Tree 3.0 initiatives, which have been generating favorable results. He emphasized the company’s robust balance sheet and cash flow, which allows for capital redeployment to shareholders.
The analyst expressed confidence in Dollar Tree’s potential for a higher market re-rating, underpinned by the various strategic moves and financial strengths mentioned. The revised price target of $84 reflects these positive developments and the analyst’s optimism about the future performance of Dollar Tree stock.
In other recent news, Dollar Tree Inc . reported its fourth-quarter 2024 earnings, revealing an adjusted earnings per share (EPS) of $2.29, which exceeded analyst expectations of $2.19. The company’s consolidated net sales reached $8.3 billion, with a 2% growth in comparable store sales, although net sales from continuing operations were $5 billion, falling short of the forecasted $8.24 billion. Additionally, Dollar Tree announced the sale of Family Dollar for over $1 billion, marking a strategic shift to focus solely on the Dollar Tree brand. Plans are underway to open approximately 400 new stores in 2025. Looking ahead, Dollar Tree has set its 2025 sales guidance between $18.5 billion and $19.1 billion, with expected comparable store sales growth of 3% to 5%. The company anticipates adjusted EPS for 2025 to be between $5.00 and $5.50, alongside capital expenditures of $1.2 billion to $1.3 billion. These recent developments highlight Dollar Tree’s strategic focus and growth plans.
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