Improvement in SG&A Trends to Drive DLTR’s Incremental Earnings
Analysts at Goldman Sachs maintain their “neutral” rating on Dollar Tree Stores (NASDAQ: DLTR), while raising their estimates for the company. The target price for DLTR has been raised from $52 to $54.
According to Goldman Sachs, DLTR reported its 3Q EPS ahead of the estimates and consensus, driven primarily by lower-than-expected SG&A expenses. DLTR’s fundamentals are unlikely to deteriorate during 4Q09. Goldman Sachs believes that the ongoing improvement in SG&A trends would drive DLTR’s incremental earnings during 4Q. SG&A trends are improving on the back of faster store payroll and lower incentive compensation growth, the analysts add.
Goldman Sachs believes that discretionary retailers would continue to outperform defensive retailers in the near term. The current rating on Dollar Tree Stores reflects this fact. Moreover, Goldman Sachs expects DLTR’s 4Q EPS to exceed the consensus.
Goldman Sachs has raised its EPS estimates for FY2009, FY2010 and FY2011 from $3.34 to $3.51, from $3.68 to $3.89 and from $4.06 to $4.35, respectively.
