Dollar Tree Shares Trading At A Real Bargain

While some issues still persist, Loop Capital reiterated a Buy rating on the company after conducting an in-store channel checks at Family Dollar to gauge the progress of Dollar Tree, Inc. DLTR turnaround efforts.

“While we were generally impressed by the in-stock levels and merchandising, cleanliness and store standards continue to be a frequent issue,” said Loop Capital analyst Anthony Chukumba.

“With Dollar Tree now over two years into the Family Dollar integration, we would have expected store level execution to be much more consistent by this point,” said Chukumba.

Despite the negativity, Loop Capital believes Dollar Tree will generate shareholder value from Family Dollar “one way or another”. The firm has a $86 price target on the company.

Chukumba stressed that Family Dollar’s store level execution continues to be a ‘mixed bag’, and could see some improvement, particularly from a cleanliness and store standards perspective.

“With Dollar Tree now over two years into the integration, we would have expected store level execution to be much more consistent by this point.”

While it appears there are more negatives than positives from analyst commentary, Family Dollar brings intrinsic value to Dollar Tree and could eventually generate value from improved financial performance or through a sale.

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