Earnings Preview: Can Dollar Tree Beat High Expectations?

Dollar Tree DLTR is on tap to report first-quarter 2011 results tomorrow morning, May 19. Analysts are looking for the discount variety store operator to report that earnings grew 18.7% from a year ago to $0.75 per share. That earnings estimate was $0.72 per share 90 days ago. Note that the consensus of analysts regularly underestimates Dollar Tree's quarterly per-share earnings. Chesapeake, Virginia-based Dollar Tree operates more than 3,600 stores in the United States and Canada. The stores offer a variety of discount-priced housewares, toys, seasonal items, food, health and beauty aids, gifts and books. During the first quarter, Dollar Tree was upgraded to Buy at Goldman Sachs. And like its other dollar store operators, Dollar Tree also has been rumored to be a buy-out target. Dollar Tree's revenue forecast for the first quarter calls for $1.5 billion. That is an increase of 11.8% from the same period of last year. And thus far, analysts expect to see similar per-share earnings and revenue results in the second quarter. Dollar Tree has had a consensus Buy rating for more than 90 days; the mean price target is currently $62.13 per share. The share price reached a 52-week high of $61.80 last week and is now about 15% higher than three months ago. Over the past year, the stock has outperformed the broader markets, as well as competitors Dollar General DG and Family Dollar FDO.