DLTR

Dollar Tree Inc

Consumer


Presented:08/10/2020
Price:$97.74
Cap:$23.19B
Current Price:$67.73
Cap:$14.56B

Presented

Date08/10/2020
Price$97.74
Market Cap$23.19B
Ent Value$27.04B
P/E Ratio28.79x
Book Value$27.49
Div Yield0%
Shares O/S237.23M
Ave Daily Vol2,482,488
Short Int2.08%

Current

Price$67.73
Market Cap$14.56B
Dollar Tree, Inc. owns and operates discount variety stores offering merchandise at the fixed prices. It operates through Dollar Tree and Family Dollar segments. The Dollar Tree segment includes operations under Dollar Tree and Dollar Tree Canada brands, 13 distribution centers in the United States and two in Canada. The Family Dollar segment comprises a chain of general merchandise retail discount stores providing consumers with a selection of competitively-priced merchandise in convenient neighborhood stores. The company was founded by J. Douglas Perry and Macon F. Brock, Jr. in 1986 and is headquartered in Chesapeake, VA.

Publicly traded companies mentioned herein: Albertsons Cos Inc (ACI), Dollar General Corp (DG), Dollar Tree Inc (DLTR), Dollarama Inc (DOL CN)

Highlights

The presenter is long shares of Dollar Tree Inc (DLTR), the value-based retailer that operates two banners (Dollar Tree and Family Dollar). The Dollar Tree banner has 7,562 stores that sell consumable and discretionary items (~50/50 split) at a $1 price point. The Family Dollar banner has 7,808 stores that are more skewed toward consumables (~75% of business) at multiple price points. DLTR announced it would acquire Family Dollar in 2014 and completed the $8.5B deal in 2015; at the time, there was positive sentiment around a strong operator (DLTR) buying a problematic asset (Family Dollar) with the hope that management could turn around the struggling banner and shrink the valuation gap between them and rival Dollar General (DG). Unfortunately for DLTR, Family Dollar has continued to struggle. Bears now point to DLTR as a serial restructurer and serial underperformer. Given the environment around COVID-19, the presenter is optimistic regarding the opportunity in front of DLTR and considers its valuation cheap. 

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Idea Discussion

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