Dollar Tree, Inc. (DLTR) recently hit a new all-time high in the weak market as investors look to align their portfolios with more defensive segments of the market. This Zacks #1 rank stock has been a top performer over the last year in a tough market, with an average earnings surprise of 13%.
Dollar Tree, Inc. operates as a variety discount store in the United States, selling most of its merchandise at the $1 price point. The company was founded in 1986, owns and operates over 3,800 stores, enjoys 9% market share and has a market cap of $5.2 billion.
Dollar Tree is one of the few companies that benefited from the tough consumer environment of the recession, with its 2009 sales and earnings showing gains while other companies saw steep losses. The last look at Dollar Tree’s business came at the end of May with better than expected Q1 results.
Revenue for the period was up 13% from last year to $1.35 billion. Earnings also came in strong at 61 cents, 9% ahead of the Zacks Consensus Estimate, leaving the company’s average earnings surprise over the last four quarters at 13%.
Dollar Tree noted that both traffic and average ticket item increased, helping it expand its operating margin to 9.5% from 8.1% last year.
Strong Balance Sheet
The company also continues to enjoy the flexibility of its strong balance sheet, with cash and equivalents totaling $339 million against total debt of $267 million.
With sustained top-line growth and strong operating leverage, Dollar Tree continues to expand, opening 74 new stores during the quarter and expanding 34 others to increase its selling square footage up 6.5% from last year.
The analysts went ahead and raised estimates on the solid performance, with the current year adding 15 cents to $2.97 and the next year adding 18 cents to $3.35, a 13% growth projection.
In spite of the recent gains, shares of DLTR still look reasonably priced, trading with a forward P/E of 14.5X, directly in line with its peer’s 14.68X.
5-Year Chart, All-Time High
DLTR just hit a new all-time high at $44.13 after jumping above a key level of resistance at $43 that had been containing shares for the last few months. Look for support from the trend line and the previously mentioned breakout area on any weakness. Take a look below.