Value
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.8 |
| P/S | 9.5 |
| EV/EBITDA | 4.5 |
| Fwd P/E | 7.8 |
| PEG | 5.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 15.6x
- ▸PEG: 1.49
DLTR · Why this verdict
Why Dollar Tree (DLTR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
A perfect four-quarter earnings beat run with an average positive surprise of 28% and a return on equity of 34% that ranks superior to peers describe a business with genuine earnings quality and capital efficiency; however, the stock is at the analyst consensus target with effectively no upside remaining, a death cross is in place as a hard technical block, and a debt-to-equity ratio of 2.2 limits balance sheet flexibility — a combination that argues for holding an existing position rather than adding new exposure.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
A return on equity of 34% ranks above peers in the discount retail group, indicating that the business generates above-average returns on the capital shareholders have committed to it. Quality breakdown | Return on equity remains above 25% for at least 2 consecutive quarters over the next 12 months, confirming the capital efficiency advantage is durable. | →Stable |
| CounterAn elevated return on equity in a leveraged retailer can be flattered by a buyback-reduced equity base rather than genuine operational efficiency; the D/E ratio of 2.2 means that a portion of the apparent return advantage is attributable to financial leverage rather than underlying business quality. | ||
The share price sits just below the analyst consensus target with roughly 2% of upside remaining and a reward-to-risk ratio of approximately 0.27-to-1, meaning the risk/reward geometry is firmly unfavorable for a new position at current levels. Price targets | Upside to the analyst consensus target expands beyond 15% as consensus estimates are revised materially higher or the stock corrects, restoring an attractive risk/reward entry. | →Stable |
| CounterA perfect four-quarter earnings beat streak may prompt analysts to raise their consensus target above the current level, which would widen the upside gap organically without requiring a price correction. | ||
A death cross pattern is in place and has triggered a hard block against new entry, while on-balance volume is declining despite the stock trading above its 200-day moving average — a combination suggesting distribution pressure that may cap near-term appreciation. Engine gate (failed) | The death cross resolves and the stock closes above both the 50-day and 200-day moving averages for 20 consecutive trading days, confirming the technical picture has cleared. | →Stable |
| CounterThe stock remains above its 200-day moving average with that average showing a flat rather than declining slope, which means the technical damage is limited; momentum indicators improving from here could resolve the pattern relatively quickly. | ||
Four consecutive quarters delivered earnings beats averaging 28% above consensus, including a single-quarter beat of nearly 88%, reflecting a track record of consistently under-promising and over-delivering that exceeds typical guidance discipline. Earnings | EPS beats consensus in the next 2 consecutive quarters, confirming that the pattern of outperformance is structural and not explained solely by unusually low prior-year comparisons. | →Stable |
| CounterA 28% average positive surprise and an 88% single-quarter beat suggest estimates may have been set at abnormally low levels; as consensus is re-calibrated toward actual performance, the scope for additional positive surprises will narrow and the streak becomes harder to extend. | ||
A debt-to-equity ratio of 2.2 adds a meaningful leverage penalty that constrains financial flexibility; if comparable-store trends or consumer spending soften, the balance sheet provides limited room to absorb an earnings shortfall without affecting the capital structure. Bear case | Debt-to-equity falls below 1.5 over the next four quarters as free cash flow is directed toward debt reduction rather than share buybacks. | →Stable |
| CounterA Piotroski financial-health score of 7 out of 9 and a positive free cash flow profile indicate the balance sheet is serviceable at the current leverage level; manageable leverage with strong cash generation is not the same as financial distress. | ||
A return on equity of 34% ranks above peers in the discount retail group, indicating that the business generates above-average returns on the capital shareholders have committed to it.
→StableQuality breakdown
- Expectation
- Return on equity remains above 25% for at least 2 consecutive quarters over the next 12 months, confirming the capital efficiency advantage is durable.
CounterAn elevated return on equity in a leveraged retailer can be flattered by a buyback-reduced equity base rather than genuine operational efficiency; the D/E ratio of 2.2 means that a portion of the apparent return advantage is attributable to financial leverage rather than underlying business quality.
The share price sits just below the analyst consensus target with roughly 2% of upside remaining and a reward-to-risk ratio of approximately 0.27-to-1, meaning the risk/reward geometry is firmly unfavorable for a new position at current levels.
→StablePrice targets
- Expectation
- Upside to the analyst consensus target expands beyond 15% as consensus estimates are revised materially higher or the stock corrects, restoring an attractive risk/reward entry.
CounterA perfect four-quarter earnings beat streak may prompt analysts to raise their consensus target above the current level, which would widen the upside gap organically without requiring a price correction.
A death cross pattern is in place and has triggered a hard block against new entry, while on-balance volume is declining despite the stock trading above its 200-day moving average — a combination suggesting distribution pressure that may cap near-term appreciation.
→StableEngine gate (failed)
- Expectation
- The death cross resolves and the stock closes above both the 50-day and 200-day moving averages for 20 consecutive trading days, confirming the technical picture has cleared.
CounterThe stock remains above its 200-day moving average with that average showing a flat rather than declining slope, which means the technical damage is limited; momentum indicators improving from here could resolve the pattern relatively quickly.
Four consecutive quarters delivered earnings beats averaging 28% above consensus, including a single-quarter beat of nearly 88%, reflecting a track record of consistently under-promising and over-delivering that exceeds typical guidance discipline.
→StableEarnings
- Expectation
- EPS beats consensus in the next 2 consecutive quarters, confirming that the pattern of outperformance is structural and not explained solely by unusually low prior-year comparisons.
CounterA 28% average positive surprise and an 88% single-quarter beat suggest estimates may have been set at abnormally low levels; as consensus is re-calibrated toward actual performance, the scope for additional positive surprises will narrow and the streak becomes harder to extend.
A debt-to-equity ratio of 2.2 adds a meaningful leverage penalty that constrains financial flexibility; if comparable-store trends or consumer spending soften, the balance sheet provides limited room to absorb an earnings shortfall without affecting the capital structure.
→StableBear case
- Expectation
- Debt-to-equity falls below 1.5 over the next four quarters as free cash flow is directed toward debt reduction rather than share buybacks.
CounterA Piotroski financial-health score of 7 out of 9 and a positive free cash flow profile indicate the balance sheet is serviceable at the current leverage level; manageable leverage with strong cash generation is not the same as financial distress.
Per-dimension breakdown
Quality
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 4.5 |
| Gross margin | 3.4 |
| Op margin | 3.6 |
| Net margin | 3.3 |
| Current ratio | 4.5 |
| FCF quality | 7.6 |
| Moat | 6.1 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 34%
- ▸Strong Piotroski F-Score: 7/9
Growth
4.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.3 |
| EPS growth | 3.9 |
Momentum
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 5.0 |
| Price target | 5.8 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.2 |
| quality rank | 8.3 |
| growth rank | 2.2 |
- ▸Superior ROE vs peers
Technical
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.4 |
| support resistance | 0.8 |
| 52w position | 6.6 |
| gap | 7.0 |
Risk (lower is worse)
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.0 |
| days to cover | 8.0 |
| volatility | 2.6 |
| put call | 2.9 |
| implied vol | 4.7 |
| max pain risk | 3.0 |
| beta | 9.0 |
| debt equity | 2.8 |
- ▸Elevated put/call: 1.56
- ▸Above max pain $65
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:6.6>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:69d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.5=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=6.6>=5.0 recovering
- 8K_FLAG:1.02
Reward-to-Risk
-0.45
Upside
-5.1%
Downside
11.2%
Sizing output
AVOID
SetupMOMENTUM_CONT — Trend continuation, RSI 63, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.9 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 7.0) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.5=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.45 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 7.0, Momentum at 6.6, and Value at 6.1; the weakest are Technical at 3.7, Growth at 4.1, and Risk (lower is worse) at 4.9. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.45 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Four consecutive quarters delivered earnings beats averaging 28% above consensus, including a single-quarter beat of nearly 88%, reflecting a track record of consistently under-promising and over-delivering that exceeds typical guidance discipline.
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P2A return on equity of 34% ranks above peers in the discount retail group, indicating that the business generates above-average returns on the capital shareholders have committed to it.
Trip ifReturn on equity falls below 20% for 2 consecutive quarters.
- P3The share price sits just below the analyst consensus target with roughly 2% of upside remaining and a reward-to-risk ratio of approximately 0.27-to-1, meaning the risk/reward geometry is firmly unfavorable for a new position at current levels.
Trip ifUpside to the analyst consensus target expands beyond 15% as estimates rise or the stock corrects more than 12%.
- P4A debt-to-equity ratio of 2.2 adds a meaningful leverage penalty that constrains financial flexibility; if comparable-store trends or consumer spending soften, the balance sheet provides limited room to absorb an earnings shortfall without affecting the capital structure.
Trip ifDebt-to-equity ratio falls below 1.5, signaling leverage is being meaningfully reduced.
- P5A death cross pattern is in place and has triggered a hard block against new entry, while on-balance volume is declining despite the stock trading above its 200-day moving average — a combination suggesting distribution pressure that may cap near-term appreciation.
Trip ifDeath cross resolves and price closes above both the 50-day and 200-day moving averages for 20 consecutive trading days.