Dollar Tree's new earnings growth outlook gives investors a reason to cheer

By James Rogers

Dollar Tree sees a light at the end of the tunnel for tariff-mitigation costs, which should lead to accelerated earnings growth

Off-price retailer Dollar Tree is hosting an investor event Wednesday.

Shares of Dollar Tree Inc. were rising Wednesday after the off-price retailer gave an earnings outlook for next year that was better than Wall Street was expecting, and projected strong growth over the next three years.

That guidance appeared to come as a pleasant surprise for investors, given that Dollar Tree (DLTR) had provided a disappointing outlook for the current quarter when it reported its second-quarter results in early September, citing negative impacts from efforts to reduce the impact of tariffs.

The stock rallied as much as 5.2% as the opening bell rang, hitting a five-week high in intraday trading, but then pared gains to be up 0.9% in recent morning trading. The intraday pullback follows a 12.4% run-up over the past week, after the stock closed at a five-month low on Oct. 7.

Shares of rival discount retailer Dollar General Corp. (DG) also benefited, gaining 1.5%.

Dollar Tree, which is hosting its investor day Wednesday, said it expects to grow fiscal 2026 earnings per share in the high-teens percentage range. The current average analyst estimate for 2026 EPS compiled by FactSet of $6.37 implies 15% growth over the current 2025 EPS consensus of $5.54.

And over the next three fiscal years, the company said EPS is expected to grow at a compounded annual growth rate between 12% and 15%, which doesn't include recent cost items tied to tariff mitigation, store conversions, lost distribution capacity and the sale of Family Dollar.

That growth outlook is much better than the expected performance for the current year, as the FactSet EPS consensus for fiscal 2025 is 8.6% above actual fiscal 2024 results. In fiscal 2024, EPS dropped 13.4%.

The retailer also affirmed the third-quarter and fiscal 2025 outlooks it gave when it announced its second-quarter results last month.

Dollar Tree shares have climbed 28.6% in 2025 and shares of Dollar General have risen 38.9%, both outpacing the S&P 500 index's SPX 14.3% gain.

-James Rogers

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10-15-25 1038ET