Dollar Tree Inc. (NASDAQ: DLTR), has a long history of outperforming other retailers when the consumer is wary about spending due to a looming slowdown in economic growth.
The earnings announcement posted by the discount store chain on Wednesday does not seem to indicate that this is the case.
DLTR fell by close to 20 percent this morning, after it reported disappointing results for the second quarter. It also lowered its full-year guidance because of pressure from customers with higher and middle incomes.
Peter Keith, Piper Sandler’s analyst, continues to believe that Dollar Tree Inc. shares will continue to fall.
Walmart’s actions are making it difficult for Dollar Tree to sell their stock
Peter Keith still recommends avoiding Dollar Tree as Walmart has succeeded in attracting consumers of middle and higher income with their online stores.
In a recent CNBC interview, he said that Walmart is a giant vacuum cleaner sucking up market share. More and more consumers are turning to online shopping and using it as a convenience.
Walmart’s US sales grew by an incredible $4.4 billion during its last reported quarter. DLTR, on the other hand, reported an overall revenue for Q2 of only $7.38 Billion.
Piper Sandler is not alone in her opinion. Analysts expect Dollar Tree to rise by an average of $131, which would indicate a potential gain of about 85%.
The US Presidential elections may impact DLTR
Peter Keith believes that Dollar Tree shares will continue to fall, not only because of the US Presidential election this November but also due to the fact that the retailer could be hit even harder by the results regardless.
If Trump wins, he could face higher tariffs. This would be a major problem for DLTR which imports a lot from China.
According to Piper Sandler, an analyst, a Harris win could increase the costs of the Nasdaq listed firm, because a Democratic-led government will likely push to change overtime rules that would raise minimum wages for certain employees from $44,000 up to $59,000.
Dollar Tree’s stock has fallen below its all-time low. DLTR doesn’t have a high dividend yield to make it appealing for some investors.
BMO Capital analysts reiterated on Wednesday their rating of “outperform”, a discount chain in the United States that offers a variety of prices.
The post Dollar Tree Stock is in trouble and the US Presidential election could worsen it may be updated as new developments unfold.
