Dollar Tree Earnings: Not Enough to Please Investors

Dollar Tree Inc. (NASDAQ:DLTR) reported net income above Wall Street’s expectations for the second quarter. Dollar Tree operates discount variety stores in the United States. Its stores offer merchandise at the fixed price of $1.00. The company operates stores under the names of Dollar Tree, Deal$, and Dollar Bills.

Investing Insights: Is TV the Next Bullish Catalyst for Apple’s Stock?

Dollar Tree Inc. Earnings Cheat Sheet

Results: Net income for Dollar Tree Inc. rose to $119.2 million (51 cents per share) vs. $94.9 million (39 cents per share) in the same quarter a year earlier. This marks a rise of 25.6% from the year-earlier quarter. Per-share data reflects the impact of a stock split.

Revenue: Rose 10.2% to $1.7 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Dollar Tree Inc. beat the mean analyst estimate of 47 cents per share. It fell exactly in line with the average revenue estimate of $1.7 billion.

Quoting Management: “I am pleased with our second quarter performance,” President and CEO Bob Sasser said. “Dollar Tree continues to deliver consistently strong sales and earnings. I am particularly proud of the increases in operating margin and inventory turns. We remain focused on providing great values for our customers and superior returns for our shareholders. Our stores are well-stocked with a terrific, balanced assortment of relevant merchandise for our customers and we are ready for an exciting fall season.”

Key Stats:

For the past five quarters, the company has seen double-digit year-over-year percentage revenue growth. Over that span, the company has averaged growth of 11.7%, with the biggest boost coming in the fourth quarter of the last fiscal year when revenue rose 12.8% from the year earlier quarter.

The company has now seen its net income rise for three quarters in a row. In the first quarter, net income rose 15% and in the fourth quarter of the last fiscal year, the figure rose 15.6%.

The company has beaten estiamtes for two quarters in a row. In the first quarter, it topped expectations with net income of 50 cents versus a mean estimate of net income of 49 cents per share.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the third quarter has moved up from 51 cents a share to 52 cents over the last ninety days. The average estimate for the fiscal year is $2.48 per share, a rise from $2.46 ninety days ago.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

Don’t Miss These Additional Hot Stories:

Do Hedge Funds Still Have Faith in GOLD?

Is General Electric a Buy, Sell, or Hold?

Hedge Funds Reshuffled These Tech Bets>>