Market Overview

Deutsche Goes Shopping For Discount Retailer Stocks

Share:
Deutsche Goes Shopping For Discount Retailer Stocks

Paul Trussell of Deutsche Bank took a deep dive into the "low-end" retail sector, which he argues to be "one of the healthiest groups in retail." However, the analyst pointed out that in some cases, retail names are trading near all-time highs, which creates concerns among investors moving forward.

Trussell added that he sees upside in the group as being "tempered" in the near term, but the group's "heightened" valuation could remain due to the following:

    1. Limited share loss to e-commerce players
    2. "Unique" margin profiles and levers
    3. An encouraging macro backdrop that could support momentum among the "low-end" customer base

Trussell also stated that the six stocks discussed in the group (seen below) are all trading at over a full-turn premium to their respective historical multiples on an EV/EBITDA basis and 1.9x premiums on their forward P/E.

Related Link: Cramer Shares His Concerns About Retail, And He Has A Lot To Say

Summary Of Analyst Recommendations

    1. Wal-Mart Stores, Inc. (NYSE: WMT) was maintained with a Hold rating with a price target lowered to $77 from a previous $68.
    2. Five Below Inc (NASDAQ: FIVE) was maintained with a Hold rating with a price target raised to $46 from a previous $39.
    3. Dollar General Corp. (NYSE: DG) was downgraded to Hold from Buy with a price target raised to $99 from a previous $95.
    4. Dollar Tree, Inc. (NASDAQ: DLTR) was upgraded to Buy from Hold with a price target raised to $110 from a previous $82.
    5. Big Lots, Inc. (NYSE: BIG) was maintained with a Hold rating and $49 price target.
    6. Fred's, Inc. (NASDAQ: FRED) was maintained with a Hold rating and $15 price target.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for BIG

DateFirmActionFromTo
Oct 2020Wolfe ResearchInitiates Coverage OnOutperform
Aug 2020Deutsche BankMaintainsHold
Jun 2020Loop CapitalUpgradesHoldBuy

View More Analyst Ratings for BIG
View the Latest Analyst Ratings

 

Related Articles (BIG + DG)

View Comments and Join the Discussion!

Posted-In: Analyst Color Long Ideas Upgrades Downgrades Reiteration Top Stories Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

StockFirmActionPT
ESTCCanaccord GenuityMaintains150.0
AVAVCanaccord GenuityMaintains98.0
OKTACanaccord GenuityMaintains250.0
SNOWCanaccord GenuityMaintains275.0
RCMSVB LeerinkMaintains26.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com