Dollar Tree
DLTR
$125.31
-4.37%
Dollar Tree, Inc. operates roughly 9,000 small-box discount stores across the United States and Canada, selling consumables (about 49% of sales), variety merchandise (45%), and seasonal goods (6%), with approximately 85% of items priced under $2 and private-label products accounting for nearly one-third of sales. The company is a scaled value-retail operator in the Consumer Defensive discount-store channel, differentiated by its fixed-and-multi-price model that blends traffic-driving consumables with higher-margin discretionary assortments, positioning it between pure dollar-format peers and broader off-price retailers. The current investor narrative centers on a turnaround: management has lifted its 2026 earnings outlook, with tariff refunds being reinvested into price and store growth, while Q2 FY2026 delivered a strong earnings beat alongside 7.0% revenue growth and a sharp gross-margin recovery. Debate now hinges on whether margin expansion and aggressive store openings are durable as economic anxiety pushes shoppers toward bargain hunting, versus concerns over expansion execution and a still-elevated debt load.…
DLTR
Dollar Tree
$125.31
Related headlines
DLTR 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Dollar Tree's 12-month outlook, with a consensus price target around $135.38 and implied upside of +8.0% versus the current price.
Average Target
$135.38
0 analysts
Implied Upside
+8.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$98 - $170
Analyst target range
Coverage is broad, with 26 analysts and a consensus recommendation of "hold" (mean rating 2.52 on a 1-to-5 scale). The average target price of $135.38 implies about 9.0% upside from the current $124.18, a modest gap that reflects the mixed sentiment — recent actions include Jefferies upgrading to Hold from Underperform, while BMO Capital remains at Underperform and Morgan Stanley and Piper Sandler stay Neutral, balanced against Buy/Overweight ratings from UBS, Truist, Guggenheim, Barclays, and Wells Fargo. The consensus leans neutral-to-cautiously-bullish rather than conviction-bullish.
The target range is wide, from $98.00 to $170.00 — a spread of roughly 73% around the average — signaling genuine disagreement about the durability of the margin recovery. The $170 high target assumes multiple expansion and sustained gross-margin gains toward the mid-40s plus continued store growth, while the $98 low target prices in margin compression and execution risk on expansion. Consensus FY EPS of $8.39 (range $8.25–$8.50) and revenue of $25.58 billion underpin the average target; the wide dispersion and predominantly Neutral/Equal-Weight stances suggest investors should treat the average target as a fair-value anchor rather than a strong directional signal.
Bulls vs Bears: DLTR Investment Factors
The bull case currently has stronger evidence: the margin inflection is documented across three consecutive quarters (gross margin 35.89% to 42.91%), revenue growth accelerated to 7.02%, and $1.853 billion of TTM free cash flow is funding $623.1 million of quarterly buybacks that mechanically lift EPS. The bear case rests less on current fundamentals than on durability — whether the 850-basis-point gross-margin gain survives once tariff refunds are exhausted — and on a balance sheet with 1.88x debt-to-equity and a 1.07 current ratio that leaves little room for error. Analyst sentiment corroborates the balanced view: a 'hold' consensus with a 9.0% average upside and a 73% target spread shows the Street is not yet convinced. The single most important tension is whether the Q2 gross margin near 43% is structural or refund-assisted; if structural, the 15.7x forward PE is cheap and the $170 high target becomes reachable, but if it reverts toward the 36% trailing level, earnings estimates of $8.39 are at risk and the $98 low target comes into play.
Bullish
- Margin expansion is dramatic and multi-quarter: Gross margin rose from 35.89% in Q3 FY2025 to 36.87% in Q1 FY2026 to 42.91% in Q2 FY2026, a roughly 850-basis-point jump year over year versus Q2 FY2025's 34.43%. Operating margin followed the same path (6.72% to 9.51% to 14.11%), and Q2 net income of $514.5 million more than doubled the prior-year $188.4 million.
- Revenue growth accelerating to 7.0%: Q2 FY2026 revenue of $4.891 billion grew 7.02% year over year from $4.570 billion, with consensus FY revenue of $25.58 billion implying continued mid-single-digit expansion. The entire revenue base now sits in the core Dollar Tree banner ($4.887 billion of the $4.891 billion total) following the Family Dollar divestiture, simplifying the story.
- Strong cash generation funds aggressive buybacks: TTM free cash flow of $1.853 billion with a 73.3% FCF conversion ratio, plus Q2 operating cash flow of $921.5 million against only $246.3 million of capex. Management repurchased $623.1 million of stock in Q2 alone, and share count has fallen from 215.1 million to 190.6 million over the past two years, mechanically lifting EPS.
- Analyst average target implies 9% upside: The $135.38 average target across 26 analysts represents about 9.0% upside from $124.18, with the high target at $170.00 (roughly 37% upside). Recent sentiment has improved, including a Jefferies upgrade to Hold from Underperform, and consensus FY EPS of $8.39 against a 15.7x forward PE leaves room for re-rating if margins hold.
Bearish
- Leverage and thin liquidity cushion: Debt-to-equity of 1.88x with a current ratio of just 1.07 leaves limited near-term liquidity buffer, and the 6.44x P/B looks rich because book equity is thin after years of buybacks and leverage. Interest coverage of roughly 38.8x is comfortable today, but the balance sheet offers little slack if margins reverse.
- Margin gains may be tariff-refund-assisted: Management explicitly attributes part of the raised 2026 outlook to tariff refunds being reinvested into price and store growth. The 42.91% quarterly gross margin versus a 36.40% trailing figure raises the question of whether the Q2 spike is structural or a one-time benefit — the single most important uncertainty in the thesis.
- Consensus is only 'hold' with wide dispersion: The mean rating of 2.52 across 26 analysts is neutral, with BMO at Underperform and Morgan Stanley and Piper Sandler at Neutral. Targets range from $98.00 to $170.00 — a 73% spread — signaling genuine disagreement about durability, and the 9.0% average upside is too modest to constitute a strong directional signal.
- Choppy technicals and negative YTD performance: Despite the 32.06% one-year gain, DLTR is down 2.76% year-to-date and 1.40% over three months (a 4.09-point relative-strength shortfall versus SPY). The stock peaked at $136.75 in late August, fell to about $112 by mid-September, and the 38.53% max drawdown shows low beta did not insulate shareholders in the prior selloff.
DLTR Technical Analysis
DLTR is in a recovery uptrend that has stalled into consolidation: the stock is up 32.06% over the past year versus a 15.53% gain for SPY, a 16.53-point relative-strength advantage, yet it remains down 2.76% year-to-date. At $124.18, the shares sit at roughly 67.8% of the 52-week range between the $85.88 low and $142.40 high — comfortably above the midpoint but about 12.8% below the high, consistent with a stock that has repaired damage from its lows without yet reclaiming leadership highs. The 38.53% max drawdown underscores how violent the prior decline was, so the current positioning reads as constructive recovery rather than overextension.
Short-term momentum is clearly re-accelerating: the stock has gained 10.48% over the past month against a 1.22% SPY advance, a 9.26-point relative-strength spread, and is up 17.23% over six months (9.75 points ahead of SPY). That contrasts with a 1.40% decline over three months and a 4.09-point relative-strength shortfall versus SPY, meaning the recent surge is a reversal of a mid-year pullback rather than a continuation of a smooth trend — the stock peaked near $136.75 in late August, fell to about $112 by mid-September, and has since rebounded to $124.18. The 2.54 short ratio and 2.14 million average volume suggest moderate short interest that could add fuel to further upside, though the choppy path argues for confirmation before extrapolating the one-month strength.
Key technical levels are well defined: support sits at the $112 area retested in September and, more decisively, the $85.88 52-week low, while resistance is the $136.75–$142.40 zone marking the August spike high and the 52-week ceiling. A breakout above $142.40 would signal a full trend reversal with new-high momentum, whereas a breakdown below $112 would re-open the September lows and put the $85.88 floor in play. With a beta of 0.716, DLTR is roughly 28% less volatile than the market, which supports larger position sizing for a given risk budget but also means the stock may lag in sharp risk-on rallies — the 38.53% max drawdown shows that low beta did not insulate shareholders during the prior selloff.
Beta
0.72
0.72x market volatility
Max Drawdown
-38.5%
Largest decline past year
52-Week Range
$86-$142
Price range past year
Annual Return
+24.5%
Cumulative gain past year
| Period | DLTR Return | S&P 500 |
|---|---|---|
| 1m | +10.7% | -1.0% |
| 3m | +4.0% | +2.9% |
| 6m | +20.8% | +6.5% |
| 1y | +24.5% | +13.1% |
| ytd | -1.9% | +11.4% |
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DLTR Fundamental Analysis
Revenue is growing at a healthy clip: Q2 FY2026 revenue reached $4.891 billion, up 7.02% year over year from $4.570 billion in Q2 FY2025, and the trailing four quarters total roughly $20.08 billion ($4.751B + $5.451B + $4.976B + $4.891B). The sequential trajectory shows Q1 FY2026 at $4.976 billion and Q4 FY2026 at $5.451 billion, with the latest quarter's 7.0% growth marking a clear acceleration from the prior-year comparisons, and the single reported segment — Dollar Tree at $4.887 billion — confirms the entire revenue base now sits in the core banner following the Family Dollar divestiture. Consensus FY revenue of $25.58 billion implies continued mid-single-digit expansion, supporting the turnaround thesis that traffic and basket are both contributing.
Profitability has inflected sharply: Q2 FY2026 net income was $514.5 million (10.5% net margin) on a 42.91% gross margin, versus $188.4 million and a 34.43% gross margin in Q2 FY2025 — a roughly 850-basis-point margin expansion. The multi-quarter trend is equally strong, with gross margin rising from 35.89% in Q3 FY2025 to 36.87% in Q1 FY2026 and 42.91% in Q2 FY2026, while operating margin climbed from 6.72% to 9.51% to 14.11% over the same span. The company is solidly profitable with a 6.61% trailing net margin and 8.23% operating margin, and the margin recovery — aided by tariff refunds and mix — is the single most important driver of the earnings beat and raised guidance.
Balance-sheet leverage is the main blemish: debt-to-equity stands at 1.88x with a current ratio of just 1.07, leaving limited liquidity cushion, though interest coverage of roughly 38.8x on Q2 operating income of $690.1 million shows debt service is comfortably covered. Cash generation is robust — TTM free cash flow of $1.853 billion, Q2 operating cash flow of $921.5 million against capex of $246.3 million, and a 73.3% FCF conversion ratio — and management is returning capital aggressively, repurchasing $623.1 million of stock in Q2 alone while paying no dividend. ROE of 34.16% and ROA of 8.26% reflect both genuine profitability and the leverage multiplier, so the 1.88x debt load warrants monitoring even as internal funding of growth looks adequate.
Quarterly Revenue
$4.9B
2026-08
Revenue YoY Growth
+7.0%
YoY Comparison
Gross Margin
42.9%
Latest Quarter
Free Cash Flow
$1.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is DLTR Overvalued?
Because DLTR is profitable — Q2 FY2026 net income of $514.5 million and positive trailing EPS — the PE ratio is the appropriate primary metric, and the trailing PE of 18.91x against a forward PE of 15.70x implies roughly 17% earnings growth is already discounted, consistent with consensus FY EPS of $8.39 versus the current run-rate. The gap between trailing and forward multiples signals the market expects margin recovery and buyback-driven share reduction to lift earnings, though the negative PEG ratio of -0.13 reflects the distorted trailing earnings base and should be disregarded in favor of the forward multiple.
On relative valuation, DLTR trades at a PS of 1.25x, EV/Sales of 1.49x, and EV/EBITDA of 12.92x, with a P/B of 6.44x that looks rich only because book equity is thin after years of buybacks and leverage. Against the discount-store peer set, a 15.7x forward PE is a modest premium to the low-teens multiples typical of mature value retailers but well below historical growth-retailer levels, and the 36.40% gross margin and 8.23% operating margin are consistent with the sector's thin-margin economics — the premium is defensible only if the current 42.9% quarterly gross margin proves structural rather than tariff-refund-assisted.
Historically, DLTR's own PE band has ranged from about 11.6x (Q4 FY2025) to over 30x during earnings troughs, and the current 18.91x trailing sits in the middle of that range rather than at an extreme. The PS ratio of 1.25x, however, is near the low end of its multi-year history (versus 4.96x reported in the Q2 historical ratio set, which reflects a different share-count basis), suggesting the market is not pricing in heroic expectations. Net-net, valuation looks fair-to-attractive if margin gains hold, but the 6.44x P/B and 1.88x debt-to-equity leave little room for disappointment.
PE
18.9x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 12x~42x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on leverage and margin durability. Debt-to-equity of 1.88x combined with a current ratio of just 1.07 leaves limited liquidity cushion, and the 6.44x P/B is inflated by thin book equity after years of buybacks. The most acute risk is that the Q2 gross margin of 42.91% — versus a 36.40% trailing figure and 34.43% in Q2 FY2025 — is partly tariff-refund-assisted; if refunds roll off and margin reverts toward the mid-30s, the $8.39 consensus EPS would be materially overstated. Revenue concentration is now total: the Dollar Tree banner accounts for $4.887 billion of the $4.891 billion quarterly total, so there is no diversification buffer post-Family Dollar divestiture, and aggressive store openings add execution risk on top of $246.3 million quarterly capex.
Market and competitive risks revolve around valuation and sentiment. At 18.91x trailing and 15.70x forward earnings, DLTR trades at a modest premium to the low-teens multiples typical of mature value retailers, a premium defensible only if the 42.9% quarterly gross margin proves structural. Beta of 0.716 means the stock is roughly 28% less volatile than the market, but that also means it may lag sharp risk-on rallies, and the 38.53% max drawdown demonstrates low beta offered no protection in the prior selloff. The 73% spread between the $98 low and $170 high analyst targets, plus a 'hold' consensus at 2.52, signals that sentiment could swing sharply on a single quarter; news flow already flags store expansion concerns overshadowing the earnings beat, and competitive pressure from peers like DG and FIVE in the value channel keeps pricing power constrained.
In a worst-case scenario, tariff refunds prove one-time, gross margin reverts toward the 36% trailing level, and the reinvestment in price and store growth fails to hold traffic. That would compress EPS well below the $8.39 consensus, trigger downgrades from the already-neutral analyst cohort, and likely push the stock toward the $98 low target — about 21% below the current $124.18. A more severe outcome, retesting the $85.88 52-week low, would represent a 31% loss from current levels and is plausible if margin compression coincides with a broad market risk-off move, given the stock already demonstrated a 38.53% max drawdown in its recent history. The realistic downside band is therefore -21% to -31%, with the $112 September support level as the first warning sign.