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Dollar Tree (DLTR) Stock Sinks As Market Gains: Here's Why

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The latest trading session saw Dollar Tree (DLTR - Free Report) ending at $68.94, denoting a -0.61% adjustment from its last day's close. The stock's change was less than the S&P 500's daily gain of 0.61%. Elsewhere, the Dow saw an upswing of 0.97%, while the tech-heavy Nasdaq appreciated by 0.33%.

Heading into today, shares of the discount retailer had gained 2.17% over the past month, lagging the Retail-Wholesale sector's gain of 5.88% and the S&P 500's gain of 5.36% in that time.

Market participants will be closely following the financial results of Dollar Tree in its upcoming release. The company's upcoming EPS is projected at $1.06, signifying a 9.28% increase compared to the same quarter of the previous year. Meanwhile, the latest consensus estimate predicts the revenue to be $7.45 billion, indicating a 1.88% increase compared to the same quarter of the previous year.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $5.33 per share and a revenue of $30.71 billion, indicating changes of -9.51% and +0.34%, respectively, from the former year.

Investors should also note any recent changes to analyst estimates for Dollar Tree. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.03% decrease. As of now, Dollar Tree holds a Zacks Rank of #5 (Strong Sell).

In the context of valuation, Dollar Tree is at present trading with a Forward P/E ratio of 13.02. This indicates a discount in contrast to its industry's Forward P/E of 19.97.

Investors should also note that DLTR has a PEG ratio of 2.94 right now. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The average PEG ratio for the Retail - Discount Stores industry stood at 2.41 at the close of the market yesterday.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. Currently, this industry holds a Zacks Industry Rank of 220, positioning it in the bottom 13% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.


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