Dollar Tree Shares Plunge 8% Since Q3 Report

Dollar Tree (NASDAQ:DLTR) shares fell more than 8% since the company’s reported Q3 results on Tuesday. While both Q3 EPS of $1.20 and revenue of $6.94 billion came in better than the Street estimates of $1.18 and $6.84 billion, respectively, the Q4 EPS guidance was disappointing. The weaker-than-expected guide (now implies EPS of $2.00 vs. Street’s $2.15) due to cost pressures further boosted investor concern around the company's 2023 EPS power.

Q4/23 revenue is expected in the range of $7.54-7.68 billion, compared to the Street estimate of $7.52 billion. For the full year, the company expects revenue in the range of $28.14-28.28 billion, compared to the Street estimate of $28.08 billion.

Analysts at Deutsche Bank had viewed 2023 as a transition period, and highlighted that the company: (1) has significantly improved the depth of the management team, and (2) is making much-needed investments, particularly in the Family Dollar store experience and supply chain, which the analysts believe is the right decision for the long-term health of the business.