Dollar Tree’s (DLTR), stock has plummeted and hovers at its lowest price since May 2020. The stock price has fallen by 60% since its peak in 2022. Its market capitalization is now about $16 Billion, down from $47 Billion.
The Dollar Stores are in Trouble
Dollar General, Five Below and Dollar Tree all experienced stock crashes at the same time. Dollar General’s shares are down about 70% since their all-time record high. Five Below has fallen by around 58%.
The rotation of discounters to bigger names such as Amazon and Walmart has caused these companies to crash. These companies’ subscription services, such as Amazon Prime and Walmart+, are a key advantage.
Both subscriptions offer customers greater value. Walmart+, for example, offers free delivery and video streaming to Paramount+, Pluto TV and Burger King. Amazon Prime offers free and fast delivery, as well as access to Amazon Prime.
Walmart and Amazon offer products that are also fairly inexpensive, explaining why they have seen a rise in their retail sales over the last few months.
Dollar Tree, the company that owns Family Dollar as well, has also seen a significant increase in its business costs. This firm was forced to raise wages in order to reach the minimum wage.
While its growth on the top line was strong, it struggled to maintain its bottom-line. The company’s revenue jumped up from $23 billion to $30.5 billion over the past financial year.
The net loss has risen from $998m in 2023 to over $1.6billion in 2022. In the past twelve months, its net loss grew to more than $1 billion.
What is the cause of Dollar Tree’s and Dollar General’s stock falling?
Earnings for DLTR ahead
Dollar Tree’s earnings will put the Dollar Tree share price in focus this week. The results of the Dollar Tree earnings will give more insight into its performance and if the management is still contemplating separating their two businesses.
Recent results show that Dollar Tree’s business is still under pressure, as the customer base continues to decline. Dollar Tree’s net same-store sales were 1.3% while Family Dollar was down to just 0.1%.
Sales rose 0.7%, to $7.4 billion. Gross profit rose 3.7%, to $2.2 billion. Its operating income dropped by nearly 30% while its net income decreased to $132 millions.
Analysts anticipate Dollar Tree to report a revenue increase of 1.75%, to $7.4 Billion. Forecasts for the quarter ahead are $8.2 Billion, which represents a decline of 4.6%. Dollar Tree’s revenue for the entire year is estimated to be $30.7 billion.
Dollar Tree is primarily concerned with its cost structure, not its revenue. There are also concerns about the performance of Family Dollar which was acquired by Dollar Tree for $9 billion.
Dollar Tree has been largely viewed as a bear stock by analysts. Keybanc downgraded Dollar Tree stock recently from overweight to sector-weight, and Telsey Advisory Group slashed its performance from market perform to outperform.
Dollar Tree’s average stock forecast price is $82.25 – 15% higher than its current share price of $72.81.
Stock price Analysis of Dollar Tree
TradingView DLTR Chart
Weekly chart of the DLTR shares shows a downward trend in recent months. The price has fallen from $176.63 per share in April 2022, to under $80 now.
Stock moved just below key resistance at $102.85, which was its lowest level on September 25. The stock has fallen below both the 200-week and 50-week moving averags. This formed a negative crossover pattern.
Both the MACD (Relative Strength Indicator) and Relative Movement Index (RSI), have continued to fall. The stock could continue to fall as the sellers aim for the next major support level at $60. A move above $80, the main resistance level, will negate this bearish outlook.
The post Dollar Tree Stock Price Analysis ahead of Earnings: Buy or Sell? This post may be updated as new information unfolds.
