What happened
Shares of Dollar Tree Inc. (DLTR +6.01%) jumped 10.5% in August, according to data from S&P Global Market Intelligence, after the single price-point retailer released impressive second-quarter results.
Nearly all of Dollar Tree's pop last month occurred on Aug. 24, the first trading day after it announced that second-quarter revenue had increased 5.7% to $5.28 billion, including 2.4% same-store sales growth. Net income per share fared even better, rising 36.1% to $0.98. Both figures were well above consensus expectations, which called for revenue of $5.24 billion and earnings of $0.87 per share.
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So what
Dollar Tree CEO Bob Sasser rightly stated that he was "extremely pleased" with his company's latest quarter, which included including positive comps from both its namesake chain and Family Dollar, a peer Dollar Tree acquired in a deal valued at $10 billion just over two years ago.
Dollar Tree also saw gross margin as a percentage of sales climb 40 basis points year over year, to 30.8%.
Now what
Looking ahead, Dollar Tree raised its guidance for fiscal 2017 revenue to arrive in the range of $22.07 billion to $22.28 billion, an increase from a range of $21.95 billion to $22.25 billion previously. Dollar Tree also expects net income per share for the year of between $4.44 and $4.60, up from its prior expected range of $4.17 to $4.43.
"We have a proven business model, an experienced leadership team, momentum in our business, and a transformational opportunity," added Sasser. "We are confident that we are well positioned for the back half of 2017 and look to deliver value to our long-term shareholders in the years ahead."
With that in mind, and with shares still trading roughly flat from this time one year ago, Dollar Tree could still be a compelling portfolio candidate for patient investors.
