Is Dollar Tree Stock a Buy, Hold or Sell After Earnings?

The outside of a Dollar Tree store in California

(Image credit: Justin Sullivan/Getty Images)

Dollar Tree (DLTR) stock jumped out of the gate Wednesday after the dollar store chain beat top- and bottom-line expectations for its fiscal third quarter and raised the low end of its revenue forecast for its full fiscal year.

In the 13 weeks ended November 2, Dollar Tree's revenue increased 3.5% to $7.6 billion, boosted by 1.8% same-store sales growth. Its earnings per share (EPS) were up 15.5% from the year-ago period to $1.12.

"Our Dollar Tree and Family Dollar merchandising efforts produced tangible results, and our third-quarter sales came in at the high-end of our expected range," said interim CEO Mike Creedon in a statement. "As an organization, our top priorities remain accelerating the growth of the Dollar Tree segment, completing the Family Dollar strategic review process, and unlocking value for Dollar Tree shareholders."

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The results topped analysts' expectations. Wall Street was anticipating revenue of $7.4 billion and earnings of $1.08 per share, according to Yahoo Finance.

Dollar Tree also updated its guidance for the full year, including raising the low end of its revenue forecast and narrowing its EPS forecast.

The company now expects to achieve revenue in the range of $30.7 billion to $30.9 billion and earnings per share of $5.31 to $5.51. DLTR had previously called for revenue in the range of $30.6 billion to $30.9 billion and earnings per share between $5.20 to $5.60. It added that it continues to anticipate comparable-store sales growth in the low-single-digits.

In addition, Dollar Tree announced that its chief financial officer, Jeff Davis, is stepping down and an external search for his replacement is underway.

Is Dollar Tree stock a buy, sell or hold?

Dollar Tree has struggled on the price charts in 2024, and is down 43% for the year to date. Unsurprisingly, Wall Street is on the sidelines when it comes to the consumer staples stock.

According to S&P Global Market Intelligence, the average analyst target price for DLTR stock is $82.47, representing implied upside of more than 11% to current levels. Meanwhile, the consensus recommendation is a Hold.

But some analysts have kept the faith on the large-cap stock. Financial services firm UBS Global Research, for instance, has a Buy rating and $105 price target on Dollar Tree.

"Overall, we think the stock simply prices in too much risk at current levels, with some key catalysts being overlooked," said UBS analyst Michael Lasser in a November 22 note.

Lasser says he sees "several catalysts that should drive the stock higher in the near to medium term," including DLTR being a beneficiary to moderating inflation or deflation in some categories and an improvement in profitability from its portfolio review of its Family Dollar brand.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.