In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Dollar Tree DLTR in relation to its major competitors in the Food & Staples Retailing industry. By closely examining key financial metrics, market standing, and growth prospects, our objective is to provide valuable insights and highlight company's performance in the industry.
Dollar Tree Background
Dollar Tree operates discount stores in the U.S. and Canada, including 8,134 shops under its namesake banner and 8,206 Family Dollar units (as of the end of fiscal 2022). The eponymous chain features branded and own-label goods, with most items priced at $1.25. Around 45% of Dollar Tree stores' fiscal 2022 sales came from consumables (including food, health and beauty, and household paper and cleaning products), nearly 50% from variety items (including toys and housewares), and just over 5% from seasonal goods. Family Dollar features branded and private-label goods at prices generally ranging from $1 to $10, with over 77% of fiscal 2022 sales from consumables, 9% from seasonal/electronic items (including prepaid phones and toys), 8% from home products, and 6% from apparel and accessories.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Dollar Tree Inc | 20.98 | 2.81 | 0.87 | 2.24% | $0.49 | $2.14 | 8.23% |
| Walmart Inc | 31.04 | 5.46 | 0.69 | 10.39% | $14.27 | $39.78 | 5.74% |
| Costco Wholesale Corp | 40.56 | 10.15 | 1.05 | 8.88% | $3.71 | $9.72 | 47.14% |
| Target Corp | 15.44 | 4.33 | 0.48 | 7.08% | $1.9 | $6.97 | -4.85% |
| Dollar General Corp | 12.02 | 4.09 | 0.67 | 7.67% | $0.9 | $3.04 | 3.93% |
| BJ's Wholesale Club Holdings Inc | 18.64 | 7.55 | 0.49 | 11.12% | $0.26 | $0.9 | -2.75% |
| Sendas Distribuidora SA | 17.24 | 3.81 | 0.26 | 3.85% | $1.15 | $2.56 | 20.26% |
| Pricesmart Inc | 19.55 | 2.10 | 0.52 | 2.73% | $0.06 | $0.18 | 6.39% |
| Almacenes Exito SA | 426.27 | 0.71 | 0.22 | -0.1% | $306.87 | $1339.43 | 8.52% |
| Average | 72.59 | 4.78 | 0.55 | 6.45% | $41.14 | $175.32 | 10.55% |
After thoroughly examining Dollar Tree, the following trends can be inferred:
-
With a Price to Earnings ratio of 20.98, which is 0.29x less than the industry average, the stock shows potential for growth at a reasonable price, making it an interesting consideration for market participants.
-
With a Price to Book ratio of 2.81, significantly falling below the industry average by 0.59x, it suggests undervaluation and the possibility of untapped growth prospects.
-
The Price to Sales ratio of 0.87, which is 1.58x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
-
With a Return on Equity (ROE) of 2.24% that is 4.21% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
-
The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $490 Million is 0.01x below the industry average, suggesting potential lower profitability or financial challenges.
-
Compared to its industry, the company has lower gross profit of $2.14 Billion, which indicates 0.01x below the industry average, potentially indicating lower revenue after accounting for production costs.
-
The company's revenue growth of 8.23% is significantly below the industry average of 10.55%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When comparing Dollar Tree with its top 4 peers based on the Debt-to-Equity ratio, the following insights can be observed:
-
When considering the debt-to-equity ratio, Dollar Tree exhibits a stronger financial position compared to its top 4 peers.
-
This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 1.15, which can be perceived as a positive aspect by investors.
Key Takeaways
The valuation analysis for Dollar Tree in the Food & Staples Retailing industry indicates that its PE, PB, and PS ratios are low compared to its peers. This suggests that Dollar Tree may be undervalued in terms of its earnings, book value, and sales. However, its low ROE, EBITDA, gross profit, and revenue growth indicate potential challenges in generating profitability and growth compared to its industry peers.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
