In today's rapidly changing and fiercely competitive business landscape, it is vital for investors and industry enthusiasts to carefully evaluate companies. In this article, we will perform a comprehensive industry comparison, evaluating Dollar Tree DLTR against its key competitors in the Consumer Staples Distribution & Retail industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.
Dollar Tree Background
Dollar Tree operates discount stores across the United States and Canada, with over 8,200 shops under its namesake banner and 8,350 under Family Dollar. About 45% of Dollar Tree's sales in fiscal 2022 were composed of consumables (including food, health and beauty, and cleaning products), nearly 50% from variety items (including toys and homewares), and over 5% from seasonal items. The Dollar Tree banner sells most of its merchandise at the $1.25 price point and positions its stores in well-populated suburban markets. Conversely, Family Dollar primarily sells consumable merchandise (nearly 80% of the banner's sales) at prices below $10. About two-thirds of Family Dollar's stores are located in urban and suburban markets, with the remaining one-third located in rural areas.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Dollar Tree Inc | 23.45 | 2.99 | 0.92 | 2.35% | $0.52 | $2.18 | 5.4% |
| Walmart Inc | 25.91 | 5.27 | 0.66 | 0.57% | $4.58 | $39.62 | -0.51% |
| Costco Wholesale Corp | 41.86 | 10.47 | 1.09 | 8.88% | $3.71 | $9.72 | 9.5% |
| Target Corp | 17.05 | 4.94 | 0.58 | 7.93% | $2.06 | $7.25 | -4.22% |
| Dollar General Corp | 13.43 | 4.57 | 0.75 | 7.67% | $0.9 | $3.04 | 3.93% |
| BJ's Wholesale Club Holdings Inc | 17.27 | 6.36 | 0.45 | 10.09% | $0.26 | $0.9 | 2.91% |
| Sendas Distribuidora SA | 21.40 | 4.05 | 0.27 | 4.38% | $1.36 | $2.76 | 22.92% |
| Pricesmart Inc | 19.25 | 1.84 | 0.47 | 1.38% | $0.05 | $0.19 | 9.48% |
| Average | 22.31 | 5.36 | 0.61 | 5.84% | $1.85 | $9.07 | 6.29% |
By analyzing Dollar Tree, we can infer the following trends:
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The current Price to Earnings ratio of 23.45 is 1.05x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
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Considering a Price to Book ratio of 2.99, which is well below the industry average by 0.56x, the stock may be undervalued based on its book value compared to its peers.
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The Price to Sales ratio of 0.92, which is 1.51x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The Return on Equity (ROE) of 2.35% is 3.49% below the industry average, suggesting potential inefficiency in utilizing equity to generate profits.
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The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $520 Million, which is 0.28x below the industry average. This potentially indicates lower profitability or financial challenges.
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The company has lower gross profit of $2.18 Billion, which indicates 0.24x below the industry average. This potentially indicates lower revenue after accounting for production costs.
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The company's revenue growth of 5.4% is significantly lower compared to the industry average of 6.29%. This indicates a potential fall in the company's sales performance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio gauges the extent to which a company has financed its operations through debt relative to equity.
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 assessing Dollar Tree against its top 4 peers using the Debt-to-Equity ratio, the following comparisons can be made:
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When comparing the debt-to-equity ratio, Dollar Tree is in a stronger financial position compared to its top 4 peers.
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The company has a lower level of debt relative to its equity, indicating a more favorable balance between the two with a lower debt-to-equity ratio of 1.19.
Key Takeaways
The high PE ratio suggests that Dollar Tree may be overvalued compared to its peers in the Consumer Staples Distribution & Retail industry. The low PB ratio indicates that the company's stock price is relatively low compared to its book value. The high PS ratio suggests that investors are willing to pay a premium for Dollar Tree's sales. The low ROE, EBITDA, gross profit, and revenue growth indicate that Dollar Tree may be underperforming compared to its industry peers in terms of profitability and growth.
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.
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