Jim Cramer said the following on the Dollar Store last Friday on a Mad Money episode:
"Dollar Tree is my absolute favorite dollar store. Why? Because I love the candy aisle. And they report too. And I think we need a very strong number. Remember earlier this week, Wal-Mart delivered a lackluster number? I believe that's in part because the dollar stores are nipping at Wal-Mart's heels. And Dollar Tree is one of the winners from that. Wal-Mart versus Dollar Tree, a market share tussle."
I thought I would compare these stocks and see if I agree with Jim. Generally, I see why he likes DLTR over WMT, I estimate its PE as being 1.5 times the store's growth rate, versus 2.5 times for Wal-Mart, thus DLTR is cheaper despite the higher PE, PS, etc.
Note that earnings are approaching rapidly for: TGT DLTR. Check out how much they might move on earningBounce.com.
|Stock||PE||Price/Sales||Div Yield (Trailing Annual)||Volatility|
In the following tables WMT has recently announced, while TGT and DLTR are coming up shortly. The table below shows Quarter on Quarter growth for the companies - you can see that DLTR has growth, while TGT and WMT are rather weak.
|Stock||EPS Qtr. On Qtr. Growth||Rev Qtr. On Qtr. Growth|
|WMT||5.6% 11/2013 5.1% 8/2013 4.6% 5/2013 11.1% 2/2013||1.5% 11/2013 2.3% 8/2013 1% 5/2013 3.9% 2/2013|
|TGT||-10.4% 8/2013 -26% 5/2013 0.8% 2/2013 17.1% 11/2012||2% 8/2013 -0.9% 5/2013 6.8% 2/2013 3.2% 11/2012|
|DLTR||9.8% 8/2013 18% 5/2013 25.8% 2/2013 58.1% 11/2012||8.8% 8/2013 8.2% 5/2013 15.4% 2/2013 7.7% 11/2012|
The table below shows the Quarter on Quarter growth moving forward for these companies according to analysts. Dollar tree looks like it might have trouble with its EPS growth going forward, but its sales growth looks more solid than its piers. Top line growth can trump EPS growth and some of Dollar Tree's EPS problems are due to difficult compares.
|Stock||Current Qtr EPS Growth Forecast||Next Qtr EPS Growth Forecast||Current Qtr Rev Growth Forecast||Next Qtr Rev Growth Forecast|
|WMT||1.8% ( High ) 0% ( Ave. ) -4.2% ( Low )||14.9% ( High ) 11.4% ( Ave. ) 5.3% ( Low )||6.7% ( High ) -2.3% ( Ave. ) -89.7% ( Low )||5.1% ( High ) 3.9% ( Ave. ) 2.1% ( Low )|
|TGT||-27.1% ( High ) -34.4% ( Ave. ) -39.6% ( Low )||7.2% ( High ) -1% ( Ave. ) -9.2% ( Low )||4.4% ( High ) 2.6% ( Ave. ) 0.6% ( Low )||0.7% ( High ) -1.3% ( Ave. ) -3.7% ( Low )|
|DLTR||-7.4% ( High ) -11.8% ( Ave. ) -14.7% ( Low )||21.4% ( High ) 9.5% ( Ave. ) 4.5% ( Low )||12.2% ( High ) 11% ( Ave. ) 9.3% ( Low )||5.5% ( High ) 3.3% ( Ave. ) 2% ( Low )|
I tend to agree with Jim - DLTR is the more likeable of these three retailers, but frankly, I don't like any of them. Wal-Mart has run despite the poor quarter Jim references and DLTR looks a bit weak in the EPS going forward in the out quarters. In addition to that, the stock price has run quite a bit recently. It is likely the case that all of these retailers will rise as we move into the Christmas season due to seasonality and the general bull market, but none of them seem particularly desirable on its own at current prices.