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Why Dollar Tree Stock Gained 13% in November

By Demitri Kalogeropoulos - Dec 5, 2017 at 2:57PM

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The discount retailer posted strong third-quarter results last month.

What happened

Discount retailer Dollar Tree (DLTR 0.27%) rose 13% last month, according to data provided by S&P Global Market Intelligence, compared to a 2.8% increase for the broader stock market.

DLTR Chart

DLTR data by YCharts

The increase added to an impressive run for shareholders this year, with Dollar Tree stock currently sitting at an over 35% gain compared to 18% for the market.

So what

November's bounce was powered by healthy third-quarter earnings results and a brightening outlook for the retailer's holiday season. Comparable-store sales increased by 6.3% in the quarter to mark an acceleration over the prior quarter's 2.5% increase. Dollar Tree enjoyed faster growth in both its Dollar Tree and Family Dollar chains. Earnings also beat management's expectations as profit margin expanded.

Two kids picking out candy to buy.

Image source: Getty Images.

Now what

Faster sales gains -- particularly in the context of rising prices -- give Dollar Tree good momentum heading into the fourth-quarter period that's responsible for an outsized portion of its profits each year. That's why CEO Gary Philbin and his executive team raised their full-year earnings outlook and now believe profits will come in between $4.64 per share and $4.73 per share, up from the prior forecast of between $4.44 per share and $4.60 per share. If it keeps up these market-thumping operating trends, the stock is likely to continue climbing.

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