Dollar Tree falls 9% as FY guidance suggests weaker Q4 By Investing.com

By Senad Karaahmetovic

Dollar Tree (NASDAQ:) reported better-than-expected Q3 results, which was not enough to see shares trade higher after earnings.

DLTR an EPS of $1.20 on revenue of $6.94 billion to beat the average analyst estimate of $1.18 on revenue of $6.84B. Revenue increased over 8% year-over-year while enterprise comparable sales grew +6.5%, higher than the +4.73% consensus.

For this quarter, Dollar Tree sees sales between $7.54B and $7.68B, higher than the consensus of $7.52B.

“We are increasing our sales outlook for the year. The efforts to evolve the assortment to drive consumables performance at Dollar Tree, combined with initiatives designed to improve the value proposition at Family Dollar, are working,” Mike Witynski, President and CEO, said.

In Q4, Dollar Tree sees net sales of $7.54B to $7.68B, beating the estimate of $7.54B.

However, the company said it expects to see FY EPS in the lower half of the previously provided outlook range of $7.10 to $7.40. Analysts were expecting a Q4 EPS of $7.28. On a full-year basis, DLTR expects revenue in the range of $28.14-28.28B, up from the prior range of $27.85-28.10B, and higher than the consensus of $28B.

BMO analysts said the guidance suggests “a slightly weaker 4Q but still with a wide range of outcomes.” They rate DLTR shares with an Outperform rating and a $187 target price.

Telsey Advisory Group analysts took note of stronger-than-expected comp sales.

“Dollar Tree executed well in 3Q22, although the 4Q22 outlook is mixed, with stronger sales but softer profits. Broadly, we continue to believe the company remains well-positioned to gain market share, given its convenient locations, value merchandise, and transformative initiatives,” they said.

As of 10:00 EST (15:00 GMT), DLTR shares are down 9%.