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Dollar Tree Resumes $800M Share Repurchase Program
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Dollar Tree Resumes $800M Share Repurchase Program

Dollar Tree (DLTR) has resumed its share repurchase program, which the company temporarily suspended in March due to uncertainties related to the COVID-19 pandemic. Dollar Tree stock rose 0.45% in after-hours trading on Wednesday.

In an 8-K SEC filing, the company stated, “The shares will be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending upon market conditions.”

Dollar Tree currently has $800 million authorization remaining under its existing repurchase plan. Unlike several other retailers, Dollar Tree continued to operate its stores amid the lockdowns as it sells essentials along with discretionary merchandise. The company’s fiscal second-quarter sales grew 9.4% to $6.28 billion and EPS increased 44.7% to $1.10.

Piper Sandler analyst Peter Keith reiterated a Buy rating and a price target of $113 for Dollar Tree following the company’s 2Q results. The analyst stated, “Q3 is off to a good start from a sales perspective, but core-DLTR EBIT continues to be lackluster and trend down y/y, which stifles EPS growth for the model overall.”

He added, “And while COVID dynamics are certainly an external tailwind that can last through 2H and into 2021, we have trouble pointing to needle-moving internal initiatives at this time. Valuation at ~16x our NTM EPS is somewhat attractive vs. a 3-yr mean of 17x and margin compares for core-DLTR remain easy through 2H.” (See DLTR stock analysis on TipRanks)

Overall, 6 Buys, 7 Holds and no Sell ratings add up to a cautiously optimistic Moderate Buy consensus for Dollar Tree. The stock has declined 7.8% year-to-date but the average analyst price target of $110.82 indicates that it has an upside potential of 27.8% in the coming months.

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