DLTR

**dchamber** Thu Feb 09, 2006 5:54 pm

DLTR
DLTR
Their P/E is 17.8 which is below both their 10 year average and industry average (25 and 18.3 respectively).

Analyst predict a 14.5% EPS growth rate which may be realistic given the fact that they have averaged a 26.5% annually over the last 9 years (they went public in 1995).

They have a current ration of 2.6 which is more than double their industry average of 1.1.
ROE has never dropped below 15% in a year.
The book value has been rising at about 26% per year.
Their inventory has been increasing but so have their sales.

With a 14.5% earning growth for 10 years they would have a EPS of 6.12 which could give a share price of $112 - $153 (the lower number assumes it is trading at the current industry average P/E, the higher number assume it is trading at its current 10 year average). This gives a return from 15% - 19%.

Since I’m unsure about the earning rate I substituted an 11% growth rate and reran the numbers which gives me a price target of $92 - $112 which reduces the gain from 13% - 15%.

I like to get a gain of at least 15% but in the last set of number I reduced the earnings rate to below the analyst estimates. I’m just not that confident of the 14.5% growth rate. What do you think?

I’m think maybe I should hold on and only buy if I can get it around $22.

Do you think their own average P/E is more reliable than the industry average?

Their average seemed pretty high but the industry is so diverse I’m not sure which is more accurate.
Using their average P/E as the multiplier in10 years would provide a 17% gain even using the much lower earnings estimate.

**blast_investor** Fri Feb 10, 2006 6:13 pm

Dollar Tree Stores shares did not perform well.

From the number this stock looks good, PE is fair, not too high. High return on equity.

But Dollar stores are facing fiece competition from Wal-Mart. Does it have a chance to survive Wal-Mart threat?