Investing to Wealth

Dollar Tree Inc. (NASDAQ: DLTR)

Dollar Tree Inc. (DLTR), formerly Dollar Tree Stores Inc., is an operator of discount variety stores offering merchandise at the fixed price of $1. At January 31, 2009, the Company operated 3,591 discount variety retail stores in 48 states. Approximately 3,450 of these stores sell substantially all items for $1 or less. The remaining stores, operating as Deal$, sell most items for $1 or less but also sell items for more. DLTR’s stores operate under the names of Dollar Tree, Deal$ and Dollar Bills.

Dollar Tree Inc. was founded in 1986 and is headquartered in Chesapeake, Virginia.

Source: Reuters.com, SEC Filings.

Financial Summary

Operating margin increased 170 basis points for the quarter to 7.3%. The improvement was driven by a 130 basis point increase in gross margin and a 40 basis point reduction in S.G. & A. expenses.

Cash at quarter-end totaled approximately $358 million, compared with $115 million at the end of the fiscal second quarter 2008. During the second quarter 2009, the Company repurchased 1.0 million shares of its common stock, for $42.5 million.

The Company continues to grow. During the second quarter, DLTR opened 60 stores, closed 10 stores, and expanded or relocated 16 stores. Retail selling square footage at the end of the second quarter was 31.4 million square feet, a 6.4% increase compared to a year ago.

The Company estimates sales for the third quarter of 2009 to be in the range of $1.19 - $1.23 billion, based on low-to-mid single digit positive comparable store sales. Diluted earnings per share are estimated to be in the range of $0.58 to $0.64.

Full year sales are now estimated to be in the range of $5.09 to $5.19 billion and diluted earnings per share are expected to be $3.10 to $3.25.

Source: Reuters.com, SEC Filings.

Analyst Consensus

This is the consensus forecast amongst 16 polled investment analysts. Against the Dollar Tree Inc. company.

The 13 analysts offering 12-month price targets for DLTR have a median target of 57.00, with a high estimate of 67.00 and a low estimate of 52.00. The median estimate represents a 15.95% increase from the last price of 49.16.

Source: www.ft.com

Source: http://www.reuters.com/finance/stocks/estimates?symbol=DLTR.O

Investment Highlights

DLTR announced last week that Shawnta Totten, Esq. has been named to the newly created position of VP, Governance and Corporate Counsel. In this new position, Ms. Totten will focus on the Company’s efforts on best practices in Corporate Governance and will serve as the liaison with shareholders on governance matters to ensure an open dialogue on an ongoing basis. Ms. Totten has served as Corporate Counsel and Assistant Secretary of Dollar Tree since joining the Company in 2007. She holds a Juris Doctor Degree from The Dickinson School of Law of The Pennsylvania State University and a Bachelor of Arts Degree from the University of Virginia. She is a member of the Virginia State Bar and the District of Columbia Bar.

Source: http://www.dollartreeinfo.com/

Technical Analysis

DLTR is trading above its 50-day moving average. While this is normally considered to be a bullish sign, the moving average is downward sloping which means that investors have been liquidating shares during this time period and tempers the bullishness of the signal.

DLTR is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

The MACD for DLTR currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

Comparative Analysis

Source: Thomson Financial

Insider Trading Activity

Source: Yahoo Finance

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