What To Do With Dollar Tree Stock Following Q3 Results

Alan Rifkin of BTIG recommends investors Buy shares of Dollar Tree, Inc. (NASDAQ: DLTR) after better margins led the discount retailer to post strong third-quarter results and raise its earnings guidance for the fourth quarter.

Following are the key highlights of Dollar Tree’s third-quarter print:

• Operating EPS of $0.81 beat consensus view of $0.78 and BTIG estimate of $0.79.
• Revenues rose 1.1 percent to $5.00 billion versus BTIG estimate of $5.09 billion.
• Comps: 1.7 percent, lower than BTIG estimate of 2 percent.
• Gross margin rose 209 bp versus BTIG estimate of 199 bp.
• Q4 EPS guidance raised to $1.24–$1.33 from $1.21–$1.30.
• 4Q comps seen up low-single-digits versus BTIG’s 2.0 percent estimate.
• 2016 operating EPS of $3.76–$3.85 (includes $0.09 tax benefit; excludes $0.09 debt refinancing charge.)
• 2016 comps projected up low-single-digits.
• 2016 revenue view cut to $20.67 billion–$20.77 billion from $20.69 billion–$20.87 billion.

“We expect the shares to be strong today on the heels of increased EPS guidance and strong 3Q comp. Maintain Buy,” Alan Rifkin wrote in a note.

At last check, shares of Dollar Tree climbed 10.57 percent to $90.66. The analyst has a price target of $98.

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