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Why Dollar Tree Stock Rose 21% in November

By Demitri Kalogeropoulos - Dec 4, 2020 at 9:12AM

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Sharp third-quarter sales growth sets the chain up for a big finish to 2020.

What happened

Dollar Tree ( DLTR 0.12% ) shareholders beat a surging market in November as their stock rose 21% compared to the 11% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally put the retailer's shares back ahead of the wider market, up about 18% in 2020 through early December.

A woman holding shopping bags while standing on an escalator.

Image source: Getty Images.

So what

Investors were treated to some solid operating news from the value retailing chain, which late last month revealed that sales rose 7.5% in the third quarter thanks to growth in both its Family Dollar and Dollar Tree franchises. The company notched improving profitability, too, allowing earnings to jump 29%.

Now what

Due to fluid consumer shopping dynamics during the continuing pandemic, CEO Mike Witynski and his team declined to issue a detailed outlook for key holiday shopping period. Yet Dollar Tree said the fourth quarter was "off to a very good start," with sales gains accelerating as compared to the prior quarter.

That update suggests the chain will notch a record fiscal 2020, likely with significant sales growth and a rising operating margin that give management plenty of resources to direct toward extending its momentum into 2021.

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Dollar Tree, Inc. Stock Quote
Dollar Tree, Inc.
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