Market Overview

Analyst Puts Dollar Tree's Family Dollar Stores On Amazon Radar

Share:
Analyst Puts Dollar Tree's Family Dollar Stores On Amazon Radar

Dollar Tree, Inc. (NASDAQ: DLTR) ought to consider unloading its underperforming Family Dollar Stores on a big, hungry retailer like, oh, say, Amazon.com, Inc. (NASDAQ: AMZN), says Loop Capital Markets analyst Anthony Chukumba.

“Dollar Tree has significantly underperformed the broader market indices over the past couple of years as the Family Dollar integration has gone far worse than many investors initially expected,” he said in an analyst note on Wednesday (check out Chukumba's track record).

“In addition, we believe a Family Dollar sale would likely be EPS accretive, and could result in significant stock price appreciation.”

Family Dollar Results Lackluster

He rated Dollar Tree a Hold and set a target price of $80. In Wednesday trading, Dollar Tree traded down 1.29 percent.

Amazon’s planned acquisition of Whole Foods Market, Inc. (NASDAQ: WFM) has created a cottage industry in predicting where the retail giant will strike next. Besides Amazon, Chukumba listed Wal-Mart Stores Inc (NYSE: WMT), Dollar General Corp. (NYSE: DG) and private equity firms as potential suitors.

Related Link: Speculation Runs Amok: Who Will Be Amazon’s Next Acquisition Target?

Dollar Tree acquired Family Dollar in 2015, but the merger hasn’t worked out, he said.

“Given Family Dollar's continued struggles, we believe Dollar Tree management should consider divesting Family Dollar,” he said. “We estimate selling Family Dollar would be $0.23, or 4.9 percent accretive to our current Dollar Tree F2018 diluted EPS estimate.”

He said he doesn’t believe a Family Dollar divestiture is a compelling reason to purchase Dollar Tree stock.

“That said, we think the possibility of such a transaction provides a level of downside protection — particularly if Family Dollar continues to underperform. Thus, we maintain our Hold rating.”

_____ Image Credit: "Family Dollar 50th Anniversary Flagship Store, Charlotte, NC" By Jml0519 at English Wikipedia, CC BY-SA 3.0, via Wikimedia Commons

Latest Ratings for DLTR

DateFirmActionFromTo
Oct 2019MaintainsOutperform
Aug 2019MaintainsOutperform
Aug 2019MaintainsOutperform

View More Analyst Ratings for DLTR
View the Latest Analyst Ratings

Posted-In: Anthony Chukumba BZTV Family Dollar StoresAnalyst Color M&A Price Target Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (AMZN + DG)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SWKSCascendReiterates100.0
IBMWells FargoMaintains140.0
PNCWells FargoMaintains147.0
TWOUDA DavidsonMaintains17.0
IDYAOppenheimerInitiates Coverage On17.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
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.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
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

CACI Offers Bullish FY18 Guidance, Reiterates FY17 View

Are Options Traders Betting on a Big Move in Whiting Petroleum (WLL) Stock?