June 20, 2024
Top 10 Stock Dollar Tree Sell Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Dollar Tree – Top 10 Stock in S&P 500 Consumer Discretionary Index
Dollar Tree is listed as a top 10 stock on June 20, 2024 in the market index S&P US Luxury because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company is safely financed, but all other facts speak against a stock purchase, especially the low market sentiment by professional investors. Based on the Obermatt 360° View of 23 (23% performer), Obermatt issues an overall sell recommendation for Dollar Tree on June 20, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | General Merchandise Stores |
| Index | NASDAQ 100, NASDAQ, S&P US Luxury, S&P 500 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Dollar Tree Sell
| 360 METRICS | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 41 |
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| GROWTH | ||||||||
| GROWTH | 27 |
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| SAFETY | ||||||||
| SAFETY | 85 |
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| SENTIMENT | ||||||||
| SENTIMENT | 18 |
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| 360° VIEW | ||||||||
| 360° VIEW | 23 |
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ANALYSIS: With an Obermatt 360° View of 23 (better than 23% compared with alternatives), overall professional sentiment and financial characteristics for the stock Dollar Tree are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with three out of four metrics below average for Dollar Tree. The only rank that is above average is the consolidated Safety Rank at 85, which means that the company has a financing structure that is safer than those of 85% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the Value, Growth and Sentiment Ranks are all below average. The consolidated Value Rank has a less desirable rank of 41, which means that the share price of Dollar Tree is on the high side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 27, which implies that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. Finally, the consolidated Sentiment Rank is also low at a rank of 18, which means that professional investors are more pessimistic about the stock than for 82% of alternative investment opportunities. While Safety is strong, it’s not the most critical indicator, so we suggest proceeding with caution if you are considering this stock. ...read more
RECOMMENDATION: With a consolidated 360° View of 23, Dollar Tree is worse than 77% of all alternative stock investment opportunities based on the Obermatt Method. This means that Dollar Tree shares are on the riskier side for investors. As only the financing structure, namely the Safety Rank, is on the safer side and all other consolidated Obermatt Ranks are below-average, this is a riskier stock investment proposition. This is especially the case, since professional investor sentiment, the consolidated Obermatt Sentiment Rank, is also low at 18. The negative market view on Dollar Tree may be the high stock price (low value) or the low level of growth. This is a problem. As the Safety Rank is the least significant of the four consolidated Obermatt Ranks, we cannot identify enough positive facts that are visible today to make a case for this stock investment. The company may have a strong future which would justify the high stock price, but this is not visible from investor behavior today. As market sentiment is critical, you should be careful with paying more than market-average for this stock, and conduct further research into the company's future growth potential. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for Dollar Tree negative
ANALYSIS: With an Obermatt Sentiment Rank of 18 (better than 18% compared with alternatives), overall professional sentiment and engagement for the stock Dollar Tree is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Dollar Tree. Analyst Opinions are at a rank of 54 (better than 54% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. This is a good sign, were it not for Analyst Opinions Change with a low rank of 5, which means that currently, stock research experts are changing their opinions for the worse. In other words, they are getting more critical of a stock investment in Dollar Tree. The Professional Investors rank is also low at 10, meaning that professional investors hold less stock in this company than in 90% of alternative investment opportunities. Pros tend to invest in other companies. Even worse, Market Pulse has a low rank of 38, which means that the current professional news and professional social networks are critical of this company (more negative news than for 62% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 18 (less encouraging than 82% compared with investment alternatives), Dollar Tree has a reputation among professional investors that is far below that of its competitors. There are several negative sentiment signals, with only the Analyst Opinions Rank above average. This could be a stock with a long reputation for being positive but where things are worsening. Most analysts may not see it yet, but some have, and the professionals are already quite pessimistic. Proceed with caution when investing in this stock. ...read more
Value Strategy: Dollar Tree Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 41 (worse than 59% compared with alternatives), Dollar Tree shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Dollar Tree. Price-to-Profit (also referred to as price-earnings, P/E) is 60 which means that the stock price compared with what market professionals expect for future profits is lower than for 60% of comparable companies, indicating a good value concerning Dollar Tree's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 51, which means that the stock price is lower as regards to invested capital than for 51% of comparable investments. On the other hand, Price-to-Sales is less favorable than for 57% of alternatives (only 43% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than for 99% of comparable companies, making the stock more expensive compared with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 41, is a hold recommendation based on Dollar Tree's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high concerning expected revenues, the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting Group or BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than distribute it to shareholders through dividends, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Dollar Tree Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 27 (better than 27% compared with alternatives), Dollar Tree shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Dollar Tree. Sales Growth has a rank of 60, which means that, currently, professionals expect the company to grow more than 60% of its competitors. Profit Growth with a rank of 57 is also above average. But Capital Growth has only a rank of 19, and Stock Returns with 29 are also below-average. Stock returns for Dollar Tree have recently been below 71% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 27, is a hold recommendation for growth and momentum investors. Are investors forecasting troubles based on the lack of operating investment activity at the company? This could be one explanation as to why stock returns are low. But stock returns can also be the result of correcting an error in the past, in this case, an overly optimistic outlook on the future, which is now more realistic. The Value Ranks may confirm such a picture. The more important growth indicators are revenues and profits, which are both above average for Dollar Tree. This is a positive sign from the company's operational side and may give investors courage, despite the poor recent stock price performance. ...read more
Safety Strategy: Dollar Tree Debt Financing Safety very solid
| SAFETY METRICS | June 20, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 58 |
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| REFINANCING | ||||||||
| REFINANCING | 40 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 100 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 85 |
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ANALYSIS: With an Obermatt Safety Rank of 85 (better than 85% compared with alternatives) for 2024, the company Dollar Tree has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Dollar Tree is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Dollar Tree. Leverage is at a rank of 58, meaning the company has a below-average debt-to-equity ratio. It has less debt than 58% of its competitors. Liquidity is also good at a rank of 100, meaning the company generates more profit to service its debt than 100% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 40, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 60% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 85 (better than 85% compared with alternatives), Dollar Tree has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Dollar Tree. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Dollar Tree Below-Average Financial Performance
| COMBINED PERFORMANCE | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 41 |
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| GROWTH | ||||||||
| GROWTH | 27 |
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| SAFETY | ||||||||
| SAFETY | 100 |
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| COMBINED | ||||||||
| COMBINED | 44 |
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ANALYSIS: With an Obermatt Combined Rank of 44 (worse than 56% compared with investment alternatives), Dollar Tree (General Merchandise Stores, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Dollar Tree are low in value (priced high) with a consolidated Value Rank of 41 (worse than 59% of alternatives) and show below-average growth (Growth Rank of 27) but are safely financed (Safety Rank of 85), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 44, is a hold recommendation based on Dollar Tree's financial characteristics. As the company Dollar Tree's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 41) and low growth (Obermatt Growth Rank of 27), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 85) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
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