Dollar Tree to Report Q1 Earnings as Investors Look for Clues About the Economy
Dollar Tree (DLTR) is scheduled to report fiscal first quarter earnings before the market open on Wednesday. The stock was nearly 2% higher in mid-day trading today ahead of the earnings. That move came amid some broader buying in the market, with the Nasdaq about 0.6% higher at the same time.
The market will be watching the company’s earnings report for signs of consumer health in this economy, including how the affects of tariffs and other uncertainties have shaped the market narrative this year.
Consumers, pinched by that uncertainty, have looked to tighten their balance sheets, which may provide a tailwind to dollar stores. Retailers have shown mixed results in this earnings period. Target (TGT) reported a 2.8% year-over-year decline in revenue for its first quarter to $23.8 billion. Meanwhile, other retailers, like Best Buy, (BBY) have cut their guidance amid trade uncertainty.
One drawback to this quarter could come from Dollar Tree’s exposure to foreign goods. The retailer’s competitor, Dollar General (DG), isn’t as heavily exposed to imports and is expected to report earnings tomorrow. Dollar Tree’s CEO, Michael Creedon Jr., said his company can mitigate tariffs, and the results from this quarter will help shed light on whether the company is managing tariffs well or not.
According to TradingView, analysts expect Dollar Tree to report earnings per share (EPS) of $1.21 on revenue of $4.54 billion. That would compare to an EPS and revenue of $1.43 and $7.63 billion a year ago.
Analysts are mostly neutral to bullish on the stock. There are 10 strong buys, 15 holds and only one sell rating on the stock. The average one-year price target was at 87.60, representing an expected -4.37% return.
The options market expects an +/- 8.11 point move, or 8.8% of the current stock price, based on the June 9 expiration for Dollar Tree. That is on the upper end for the average range of 5% to 10% for earnings moves. Dollar Tree had an implied volatility rank (IVR) of 46.4 as of today, meaning volatility is about average compared to the last year of trading.
Technically, DLTR has generated some solid momentum after moving higher from its April swing low. The stock is trading at the highest level since September and has largely held above its 9- and 21-day exponential moving averages (EMAs). A bullish crossover between the 50- and 200-day simple moving averages (SMAs) occurred in May, generating a bullish signal known as a Golden Cross. Support isn’t evident until around 80 where there were several swing highs between January and April.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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