Alan Rifkin of BTIG recommends investors Buy shares of Dollar Tree, Inc. DLTR after better margins led the discount retailer to post strong third-quarter results and raise its earnings guidance for the fourth quarter.
Following are the key highlights of Dollar Tree’s third-quarter print:
- Operating EPS of $0.81 beat consensus view of $0.78 and BTIG estimate of $0.79.
- Revenues rose 1.1 percent to $5.00 billion versus BTIG estimate of $5.09 billion.
- Comps: 1.7 percent, lower than BTIG estimate of 2 percent.
- Gross margin rose 209 bp versus BTIG estimate of 199 bp.
- Q4 EPS guidance raised to $1.24–$1.33 from $1.21–$1.30.
- 4Q comps seen up low-single-digits versus BTIG’s 2.0 percent estimate.
- 2016 operating EPS of $3.76–$3.85 (includes $0.09 tax benefit; excludes $0.09 debt refinancing charge.)
- 2016 comps projected up low-single-digits.
- 2016 revenue view cut to $20.67 billion–$20.77 billion from $20.69 billion–$20.87 billion.
“We expect the shares to be strong today on the heels of increased EPS guidance and strong 3Q comp. Maintain Buy,” Alan Rifkin wrote in a note.
At last check, shares of Dollar Tree climbed 10.57 percent to $90.66. The analyst has a price target of $98.
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