Margin Worries in 1Q Create a Buying Opportunity in Narrow-Moat Dollar Tree Shares
We recommend investors use the high-single-digit decline in narrow-moat Dollar Tree shares following lackluster first-quarter profitability metrics as a buying opportunity. Our view is that inclement weather and higher expenses (both wage and distribution costs hurt results by about 50 basis points) affected profit more than expected but should prove transitory. Although we plan to review our long-term assumptions of 4.4% top-line growth and 9.1% average operating margins through fiscal 2027, we...Dollar Tree is an operator of discount variety stores. The company's stores operate under the names of Dollar Tree, Family Dollar and Dollar Tree Canada. The company's segments are: Dollar Tree, which is the operator of discount variety stores providing merchandise at the fixed price point of $1.00; and Family Dollar, which operates general merchandise discount retail stores. The merchandise mix in the company's Dollar Tree stores consists of consumable merchandise, variety merchandise, and seasonal goods. The merchandise mix in the company's Family Dollar stores consists of consumable merchandise, home products, apparel and accessories merchandise, and seasonal and electronics merchandise.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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