Discount Retailer Hurting on Depressing Full-Year Sales Forecast

Supply shortages continue to weigh on DLTR

Digital Content Manager
Mar 2, 2022 at 9:39 AM
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The shares of Dollar Tree, Inc. (NASDAQ:DLTR) are down 4.2% at $133.81 this morning, after the discount retailer shared a full-year sales forecast that came in below analyst expectations. The company cited supply shortages, labor costs, and rising inflation -- overshadowing a fourth-quarter earnings beat. Dollar Tree's revenue fell short of estimates as well. 

While the stock boasts a 40% year-over-year lead, it slipped back below its year-to-date breakeven during yesterday's trading. The $144 level has kept a lid on shares, keeping DLTR from taking back its mid-November record high of $149.37. However, the equity still has support from several moving averages, including its 80-day trendline, which captured a pullback late last month. 

Analysts have yet to chime in, though sentiment among the brokerage bunch has been mixed. Of the 19 in coverage, 10 say "buy" or better, and nine say "hold" or worse. Meanwhile, the 12-month consensus price target of $155.34 is an 11.2% premium to current levels. 

Options traders took a much more bearish stance ahead of the earnings event. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DLTR sports a 10-day put/call volume ratio of 1.41, which sits in the 93rd percentile of its annual range, suggesting a much healthier-than-usual appetite for long puts of late. 

Short-term options traders have had similarly put-heavy appetites. This is per DLTR's Schaeffer's put/call open interest ratio (SOIR) of 1.00, which stands higher than 73% of readings from the past 12 months. 

 

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