A Comparison of Big Retailers: Walmart, Target, and Dollar Tree (WMT, TGT, DLTR)

Jim Cramer said the following on Dollar Tree 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, Walmart delivered a lackluster number? I believe that’s in part because the dollar stores are nipping at Walmart’s heels. And Dollar Tree is one of the winners from that. Walmart 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 Walmart, 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
WMT 15.2 0.5 2.3% 0.13
TGT 16.07 0.6 2.3% 0.16
DLTR 21.13 1.7 N/A 0.15

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 DLTR’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 )

 

Source: QoQ Charts
 

Source: QoQ Charts
 

Source: QoQ Charts
Conclusion

I tend to agree with Jim – DLTR is the more likeable of these three retailers, but frankly, I don’t like any of them. Walmart 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.