Dollar Tree (NASDAQ:DLTR) Shares Gap Down After Analyst Downgrade

Key Points

• Dollar Tree shares gapped down, opening at $100.80 after closing at $111.35, with a trading price of $102.34 and a significant volume of 3,674,071 shares.
• Analysts have mixed views on Dollar Tree, with eight holding a Buy rating, eleven a Hold rating, and two a Sell rating, while the current consensus rating is "Hold" with an average price target of $104.53.
• The company has initiated a $2.5 billion stock buyback program, indicating confidence from leadership regarding the undervaluation of its shares.

Shares of Dollar Tree, Inc. (NASDAQ:DLTR - Get Free Report) gapped down before the market opened on Wednesday after BNP Paribas downgraded the stock from a strong-buy rating to a hold rating. The stock had previously closed at $111.35, but opened at $100.80. Dollar Tree shares last traded at $102.34, with a volume of 3,674,071 shares traded.

Several other equities research analysts also recently commented on the company. The Goldman Sachs Group downgraded Dollar Tree from a "strong-buy" rating to a "strong sell" rating in a report on Thursday, June 5th. Evercore ISI lifted their price target on shares of Dollar Tree from $108.00 to $110.00 and gave the company an "in-line" rating in a research report on Tuesday, August 26th. Truist Financial boosted their price target on shares of Dollar Tree from $127.00 to $129.00 and gave the company a "buy" rating in a research note on Wednesday. JPMorgan Chase & Co. upped their price objective on shares of Dollar Tree from $138.00 to $140.00 and gave the stock an "overweight" rating in a report on Thursday. Finally, Piper Sandler reduced their price objective on shares of Dollar Tree from $112.00 to $108.00 and set a "neutral" rating for the company in a report on Thursday. Eight analysts have rated the stock with a Buy rating, twelve have assigned a Hold rating and three have issued a Sell rating to the stock. Based on data from MarketBeat.com, the company has an average rating of "Hold" and a consensus target price of $106.95.

Institutional Inflows and Outflows

Several hedge funds and other institutional investors have recently added to or reduced their stakes in the company. Price T Rowe Associates Inc. MD lifted its position in shares of Dollar Tree by 69.6% during the 1st quarter. Price T Rowe Associates Inc. MD now owns 5,848,196 shares of the company's stock worth $439,025,000 after buying an additional 2,400,586 shares in the last quarter. Alliancebernstein L.P. grew its holdings in shares of Dollar Tree by 176.9% in the second quarter. Alliancebernstein L.P. now owns 3,746,222 shares of the company's stock valued at $371,026,000 after acquiring an additional 2,393,172 shares in the last quarter. Alyeska Investment Group L.P. increased its position in shares of Dollar Tree by 1,055.1% during the first quarter. Alyeska Investment Group L.P. now owns 2,322,189 shares of the company's stock valued at $174,327,000 after acquiring an additional 2,121,149 shares during the last quarter. Norges Bank bought a new stake in Dollar Tree during the second quarter worth $185,784,000. Finally, EdgePoint Investment Group Inc. lifted its holdings in Dollar Tree by 21.4% during the first quarter. EdgePoint Investment Group Inc. now owns 9,641,507 shares of the company's stock worth $723,788,000 after acquiring an additional 1,701,344 shares during the period. 97.40% of the stock is currently owned by hedge funds and other institutional investors.

Dollar Tree Stock Performance

The firm has a market cap of $20.63 billion, a PE ratio of -7.45, a PEG ratio of 2.13 and a beta of 0.89. The company has a quick ratio of 0.72, a current ratio of 1.04 and a debt-to-equity ratio of 0.67. The company has a 50-day simple moving average of $110.41 and a two-hundred day simple moving average of $91.18.

Dollar Tree (NASDAQ:DLTR - Get Free Report) last released its earnings results on Wednesday, September 3rd. The company reported $0.77 EPS for the quarter, topping analysts' consensus estimates of $0.38 by $0.39. The company had revenue of $4.57 billion for the quarter, compared to analysts' expectations of $4.46 billion. Dollar Tree had a positive return on equity of 23.52% and a negative net margin of 13.46%.The business's revenue for the quarter was up 12.3% compared to the same quarter last year. During the same period in the previous year, the business posted $0.67 EPS. Dollar Tree has set its FY 2025 guidance at 5.320-5.720 EPS. As a group, equities research analysts forecast that Dollar Tree, Inc. will post 5.39 earnings per share for the current year.

Dollar Tree declared that its board has authorized a share buyback plan on Wednesday, July 9th that authorizes the company to repurchase $2.50 billion in outstanding shares. This repurchase authorization authorizes the company to repurchase up to 11.5% of its stock through open market purchases. Stock repurchase plans are usually an indication that the company's leadership believes its shares are undervalued.

About Dollar Tree

Dollar Tree, Inc operates retail discount stores. The company operates in two segments, Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at the fixed price of $ 1.25. It provides consumable merchandise, which includes everyday consumables, such as household paper and chemicals, food, candy, health, personal care products, and frozen and refrigerated food; variety merchandise comprising toys, durable housewares, gifts, stationery, party goods, greeting cards, softlines, arts and crafts supplies, and other items; and seasonal goods that include Christmas, Easter, Halloween, and Valentine's Day merchandise.