Intrinsic value of Dollar Tree - DLTR

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$66.60

  Intrinsic Value

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  Value-price divergence*

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DLTR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 15.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  33.69
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  20,719
  15,808
  16,172
  16,587
  17,054
  17,571
  18,138
  18,756
  19,424
  20,145
  20,918
  21,745
  22,628
  23,567
  24,566
  25,626
  26,749
  27,937
  29,194
  30,523
  31,925
  33,405
  34,965
  36,610
  38,344
  40,169
  42,091
  44,114
  46,243
  48,482
  50,838
Variable operating expenses, $m
 
  13,885
  14,193
  14,545
  14,940
  15,378
  15,858
  16,381
  16,947
  17,557
  18,211
  18,409
  19,156
  19,952
  20,797
  21,694
  22,645
  23,652
  24,716
  25,840
  27,028
  28,280
  29,602
  30,994
  32,462
  34,007
  35,634
  37,347
  39,149
  41,045
  43,039
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  19,014
  13,885
  14,193
  14,545
  14,940
  15,378
  15,858
  16,381
  16,947
  17,557
  18,211
  18,409
  19,156
  19,952
  20,797
  21,694
  22,645
  23,652
  24,716
  25,840
  27,028
  28,280
  29,602
  30,994
  32,462
  34,007
  35,634
  37,347
  39,149
  41,045
  43,039
Operating income, $m
  1,705
  1,923
  1,979
  2,042
  2,114
  2,193
  2,280
  2,375
  2,478
  2,588
  2,707
  3,336
  3,471
  3,615
  3,769
  3,931
  4,103
  4,286
  4,479
  4,682
  4,897
  5,124
  5,364
  5,616
  5,882
  6,162
  6,457
  6,767
  7,094
  7,437
  7,799
EBITDA, $m
  2,343
  2,697
  2,759
  2,829
  2,909
  2,997
  3,094
  3,199
  3,313
  3,436
  3,568
  3,709
  3,860
  4,020
  4,191
  4,371
  4,563
  4,766
  4,980
  5,207
  5,446
  5,698
  5,965
  6,245
  6,541
  6,852
  7,180
  7,525
  7,888
  8,270
  8,672
Interest expense (income), $m
  329
  879
  907
  938
  975
  1,016
  1,061
  1,110
  1,164
  1,223
  1,286
  1,353
  1,426
  1,503
  1,585
  1,672
  1,765
  1,863
  1,967
  2,077
  2,193
  2,316
  2,445
  2,582
  2,726
  2,877
  3,037
  3,205
  3,382
  3,568
  3,764
Earnings before tax, $m
  1,329
  1,044
  1,072
  1,104
  1,139
  1,178
  1,220
  1,265
  1,313
  1,365
  1,421
  1,982
  2,045
  2,112
  2,183
  2,259
  2,338
  2,422
  2,511
  2,605
  2,704
  2,809
  2,919
  3,034
  3,156
  3,285
  3,420
  3,562
  3,712
  3,869
  4,035
Tax expense, $m
  433
  282
  289
  298
  308
  318
  329
  341
  355
  369
  384
  535
  552
  570
  590
  610
  631
  654
  678
  703
  730
  758
  788
  819
  852
  887
  923
  962
  1,002
  1,045
  1,089
Net income, $m
  896
  762
  783
  806
  832
  860
  890
  923
  959
  997
  1,037
  1,447
  1,493
  1,542
  1,594
  1,649
  1,707
  1,768
  1,833
  1,902
  1,974
  2,050
  2,131
  2,215
  2,304
  2,398
  2,497
  2,601
  2,710
  2,825
  2,946

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  870
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  15,702
  15,468
  15,823
  16,230
  16,687
  17,193
  17,748
  18,352
  19,006
  19,711
  20,468
  21,277
  22,140
  23,060
  24,037
  25,074
  26,173
  27,336
  28,566
  29,866
  31,238
  32,686
  34,213
  35,822
  37,518
  39,304
  41,185
  43,164
  45,247
  47,439
  49,743
Adjusted assets (=assets-cash), $m
  14,832
  15,468
  15,823
  16,230
  16,687
  17,193
  17,748
  18,352
  19,006
  19,711
  20,468
  21,277
  22,140
  23,060
  24,037
  25,074
  26,173
  27,336
  28,566
  29,866
  31,238
  32,686
  34,213
  35,822
  37,518
  39,304
  41,185
  43,164
  45,247
  47,439
  49,743
Revenue / Adjusted assets
  1.397
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
  1.022
Average production assets, $m
  6,226
  3,177
  3,250
  3,334
  3,428
  3,532
  3,646
  3,770
  3,904
  4,049
  4,204
  4,371
  4,548
  4,737
  4,938
  5,151
  5,376
  5,615
  5,868
  6,135
  6,417
  6,714
  7,028
  7,359
  7,707
  8,074
  8,460
  8,867
  9,295
  9,745
  10,218
Working capital, $m
  1,832
  1,233
  1,261
  1,294
  1,330
  1,371
  1,415
  1,463
  1,515
  1,571
  1,632
  1,696
  1,765
  1,838
  1,916
  1,999
  2,086
  2,179
  2,277
  2,381
  2,490
  2,606
  2,727
  2,856
  2,991
  3,133
  3,283
  3,441
  3,607
  3,782
  3,965
Total debt, $m
  6,446
  7,618
  7,885
  8,191
  8,534
  8,914
  9,330
  9,784
  10,276
  10,805
  11,373
  11,981
  12,629
  13,320
  14,054
  14,833
  15,658
  16,531
  17,455
  18,431
  19,462
  20,549
  21,696
  22,905
  24,178
  25,520
  26,932
  28,418
  29,983
  31,628
  33,359
Total liabilities, $m
  10,312
  11,616
  11,883
  12,189
  12,532
  12,912
  13,328
  13,782
  14,274
  14,803
  15,371
  15,979
  16,627
  17,318
  18,052
  18,831
  19,656
  20,529
  21,453
  22,429
  23,460
  24,547
  25,694
  26,903
  28,176
  29,518
  30,930
  32,416
  33,981
  35,626
  37,357
Total equity, $m
  5,390
  3,851
  3,940
  4,041
  4,155
  4,281
  4,419
  4,570
  4,733
  4,908
  5,096
  5,298
  5,513
  5,742
  5,985
  6,243
  6,517
  6,807
  7,113
  7,437
  7,778
  8,139
  8,519
  8,920
  9,342
  9,787
  10,255
  10,748
  11,267
  11,812
  12,386
Total liabilities and equity, $m
  15,702
  15,467
  15,823
  16,230
  16,687
  17,193
  17,747
  18,352
  19,007
  19,711
  20,467
  21,277
  22,140
  23,060
  24,037
  25,074
  26,173
  27,336
  28,566
  29,866
  31,238
  32,686
  34,213
  35,823
  37,518
  39,305
  41,185
  43,164
  45,248
  47,438
  49,743
Debt-to-equity ratio
  1.196
  1.980
  2.000
  2.030
  2.050
  2.080
  2.110
  2.140
  2.170
  2.200
  2.230
  2.260
  2.290
  2.320
  2.350
  2.380
  2.400
  2.430
  2.450
  2.480
  2.500
  2.520
  2.550
  2.570
  2.590
  2.610
  2.630
  2.640
  2.660
  2.680
  2.690
Adjusted equity ratio
  0.305
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249
  0.249

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  896
  762
  783
  806
  832
  860
  890
  923
  959
  997
  1,037
  1,447
  1,493
  1,542
  1,594
  1,649
  1,707
  1,768
  1,833
  1,902
  1,974
  2,050
  2,131
  2,215
  2,304
  2,398
  2,497
  2,601
  2,710
  2,825
  2,946
Depreciation, amort., depletion, $m
  638
  774
  780
  787
  795
  804
  814
  824
  836
  848
  862
  374
  389
  405
  422
  440
  460
  480
  502
  524
  548
  574
  601
  629
  659
  690
  723
  758
  794
  833
  873
Funds from operations, $m
  1,811
  1,536
  1,563
  1,593
  1,627
  1,664
  1,704
  1,748
  1,795
  1,845
  1,899
  1,821
  1,882
  1,947
  2,016
  2,089
  2,166
  2,248
  2,335
  2,426
  2,522
  2,624
  2,731
  2,844
  2,963
  3,088
  3,220
  3,358
  3,504
  3,658
  3,819
Change in working capital, $m
  138
  24
  28
  32
  36
  40
  44
  48
  52
  56
  60
  65
  69
  73
  78
  83
  88
  93
  98
  104
  109
  115
  122
  128
  135
  142
  150
  158
  166
  175
  184
Cash from operations, $m
  1,673
  4,627
  1,534
  1,561
  1,590
  1,623
  1,660
  1,699
  1,742
  1,789
  1,839
  1,756
  1,813
  1,874
  1,938
  2,006
  2,079
  2,156
  2,237
  2,323
  2,413
  2,509
  2,609
  2,716
  2,828
  2,946
  3,070
  3,201
  3,338
  3,483
  3,635
Maintenance CAPEX, $m
  0
  -266
  -272
  -278
  -285
  -293
  -302
  -312
  -322
  -334
  -346
  -359
  -374
  -389
  -405
  -422
  -440
  -460
  -480
  -502
  -524
  -548
  -574
  -601
  -629
  -659
  -690
  -723
  -758
  -794
  -833
New CAPEX, $m
  -566
  -61
  -73
  -84
  -94
  -104
  -114
  -124
  -134
  -145
  -155
  -166
  -177
  -189
  -201
  -213
  -226
  -239
  -253
  -267
  -282
  -297
  -314
  -331
  -348
  -367
  -386
  -407
  -428
  -450
  -473
Cash from investing activities, $m
  -484
  -327
  -345
  -362
  -379
  -397
  -416
  -436
  -456
  -479
  -501
  -525
  -551
  -578
  -606
  -635
  -666
  -699
  -733
  -769
  -806
  -845
  -888
  -932
  -977
  -1,026
  -1,076
  -1,130
  -1,186
  -1,244
  -1,306
Free cash flow, $m
  1,189
  4,300
  1,190
  1,199
  1,212
  1,227
  1,244
  1,264
  1,286
  1,310
  1,337
  1,231
  1,262
  1,296
  1,332
  1,371
  1,413
  1,457
  1,504
  1,554
  1,607
  1,663
  1,722
  1,784
  1,850
  1,920
  1,993
  2,071
  2,152
  2,238
  2,329
Issuance/(repayment) of debt, $m
  -1,074
  230
  267
  305
  343
  380
  417
  454
  491
  529
  568
  608
  649
  690
  734
  779
  825
  874
  924
  976
  1,031
  1,087
  1,147
  1,209
  1,274
  1,341
  1,412
  1,487
  1,564
  1,646
  1,731
Issuance/(repurchase) of shares, $m
  42
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -1,061
  230
  267
  305
  343
  380
  417
  454
  491
  529
  568
  608
  649
  690
  734
  779
  825
  874
  924
  976
  1,031
  1,087
  1,147
  1,209
  1,274
  1,341
  1,412
  1,487
  1,564
  1,646
  1,731
Total cash flow (excl. dividends), $m
  130
  4,530
  1,457
  1,505
  1,555
  1,606
  1,661
  1,718
  1,777
  1,840
  1,905
  1,838
  1,911
  1,987
  2,066
  2,150
  2,238
  2,331
  2,428
  2,530
  2,637
  2,750
  2,869
  2,993
  3,124
  3,261
  3,406
  3,557
  3,717
  3,884
  4,060
Retained Cash Flow (-), $m
  -983
  -76
  -89
  -101
  -114
  -126
  -138
  -151
  -163
  -176
  -188
  -202
  -215
  -229
  -243
  -258
  -274
  -290
  -306
  -324
  -342
  -361
  -380
  -401
  -422
  -445
  -468
  -493
  -519
  -546
  -574
Prev. year cash balance distribution, $m
 
  632
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  5,085
  1,368
  1,403
  1,441
  1,481
  1,523
  1,567
  1,614
  1,664
  1,717
  1,637
  1,696
  1,758
  1,823
  1,892
  1,965
  2,041
  2,122
  2,206
  2,296
  2,390
  2,488
  2,592
  2,702
  2,817
  2,938
  3,065
  3,198
  3,338
  3,486
Discount rate, %
 
  9.20
  9.66
  10.14
  10.65
  11.18
  11.74
  12.33
  12.95
  13.59
  14.27
  14.99
  15.74
  16.52
  17.35
  18.22
  19.13
  20.08
  21.09
  22.14
  23.25
  24.41
  25.63
  26.91
  28.26
  29.67
  31.15
  32.71
  34.35
  36.07
  37.87
PV of cash for distribution, $m
 
  4,657
  1,138
  1,050
  961
  871
  782
  694
  610
  528
  452
  352
  294
  241
  194
  154
  119
  91
  68
  49
  35
  24
  16
  11
  7
  4
  3
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Dollar Tree, Inc. operates discount retail stores in the United States and Canada. The company operates in two segments, Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at the fixed price of $1.00. It provides consumable merchandise, including candy and food, and health and beauty care products, as well as everyday consumables, such as household paper and chemicals, and frozen and refrigerated food; various merchandise, including toys, durable housewares, gifts, stationery products, party goods, greeting cards, softlines, and other items; and seasonal goods consisting of Valentine's Day, Easter, Halloween, and Christmas merchandise. This segment operates under the Dollar Tree, Dollar Tree Canada, Deals, and Dollar Tree Deals brands, as well as 10 distribution centers in the United States and 2 in Canada, and a store support center in Chesapeake, Virginia. The Family Dollar segment offers consumable merchandise, including food, tobacco, health and beauty aids, household chemicals, paper products, hardware and automotive supplies, diapers, batteries, and pet food and supplies; home products, such as housewares, home d├ęcor, and giftware, as well as blankets, sheets, and towels; apparel and accessories merchandise, including clothing, fashion accessories, and shoes; and seasonal and electronics merchandise, such as Valentine's Day, Easter, Halloween, and Christmas merchandise, as well as personal electronics consisting of pre-paid cellular phones and services, stationery and school supplies, and toys. This segment operates under the Family Dollar brand, 11 distribution centers, and a store support center in Matthews, North Carolina. As of January 30, 2016, the company operated 13,851 stores in 48 states and the District of Columbia, and 5 Canadian provinces. Dollar Tree, Inc. was founded in 1986 and is based in Chesapeake, Virginia.

FINANCIAL RATIOS  of  Dollar Tree (DLTR)

Valuation Ratios
P/E Ratio 17.6
Price to Sales 0.8
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 14.2
Growth Rates
Sales Growth Rate 33.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17.7%
Cap. Spend. - 3 Yr. Gr. Rate 11.3%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 116.8%
Total Debt to Equity 119.6%
Interest Coverage 5
Management Effectiveness
Return On Assets 7.1%
Ret/ On Assets - 3 Yr. Avg. 11%
Return On Total Capital 7.5%
Ret/ On T. Cap. - 3 Yr. Avg. 12.9%
Return On Equity 18.3%
Return On Equity - 3 Yr. Avg. 22.6%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 30.9%
Gross Margin - 3 Yr. Avg. 32.1%
EBITDA Margin 11.1%
EBITDA Margin - 3 Yr. Avg. 11.4%
Operating Margin 8.2%
Oper. Margin - 3 Yr. Avg. 9%
Pre-Tax Margin 6.4%
Pre-Tax Margin - 3 Yr. Avg. 6.8%
Net Profit Margin 4.3%
Net Profit Margin - 3 Yr. Avg. 4.4%
Effective Tax Rate 32.6%
Eff/ Tax Rate - 3 Yr. Avg. 35.6%
Payout Ratio 0%

DLTR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DLTR stock intrinsic value calculation we used $15498 million for the last fiscal year's total revenue generated by Dollar Tree. The default revenue input number comes from 2017 income statement of Dollar Tree. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DLTR stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.2%, whose default value for DLTR is calculated based on our internal credit rating of Dollar Tree, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Dollar Tree.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DLTR stock the variable cost ratio is equal to 87.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for DLTR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 11.9% for Dollar Tree.

Corporate tax rate of 27% is the nominal tax rate for Dollar Tree. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DLTR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DLTR are equal to 20.1%.

Life of production assets of 11.7 years is the average useful life of capital assets used in Dollar Tree operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DLTR is equal to 7.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4407 million for Dollar Tree - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 227.486 million for Dollar Tree is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Dollar Tree at the current share price and the inputted number of shares is $15.2 billion.


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COMPANY NEWS

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▶ [$$] Mid-Year Roundtable: 26 Investment Picks   [Jun-10-17 12:01AM  Barrons.com]
▶ Dollar Tree Faces Off With Sycamore Partners   [11:05AM  The Wall Street Journal]
▶ Analysts Find Gold, Dross in Retail Stocks   [Jun-04-17 10:08AM  24/7 Wall St.]
▶ The stocks really bolstering this rally   [06:13PM  CNBC Videos]
▶ Dollar Trees Ratings and Stock Market Performance   [May-31-17 07:38AM  Market Realist]
▶ Analyzing Dollar Trees Fiscal 2017 Guidance   [May-30-17 03:05PM  Market Realist]
▶ Key Takeaways from Dollar Trees 1Q17 Results   [12:02PM  Market Realist]
▶ Consumer Staples Sink and Soar This Week   [May-26-17 11:07AM  Investopedia]
▶ Retail And E-Commerce News And Stocks To Watch   [08:57AM  Investor's Business Daily]
▶ Costco Beats After Burlington Soars, Dollar Tree Guides Low   [05:17PM  Investor's Business Daily]
▶ Is Dollar General Heading Higher?   [02:15PM  TheStreet.com]
▶ Dollar Tree misses 1Q profit forecasts   [07:40AM  Associated Press]
▶ Chuck Royce Continues to Buy These 10 Stocks   [May-16-17 03:34PM  GuruFocus.com]
▶ Ranked: Birminghams top grocery chains   [May-05-17 02:10PM  American City Business Journals]
▶ Bullish and Bearish Reversals for This Week   [May-01-17 01:15PM  TheStreet.com]
▶ Cramer: Earnings Season Is Better Than Many Believe   [Apr-20-17 07:01PM  TheStreet.com]
▶ Johnson County (no, not that one) lands $110M Dollar Tree facility   [Apr-18-17 02:35PM  American City Business Journals]
▶ ETFs with exposure to Dollar Tree, Inc. : April 17, 2017   [Apr-17-17 12:52PM  Capital Cube]
▶ 4 Reasons To Buy Wal-Mart   [Apr-07-17 03:07PM  Barrons.com]
▶ 2 Great Stocks You Can Buy on Sale Now   [Mar-31-17 11:08AM  Motley Fool]
▶ Jim Cramer -- Stocks Getting a Boost From Border Tax Doubts   [Mar-29-17 10:48AM  TheStreet.com]
▶ Why Credit Suisse Is Very Cautious on Dollar Stores   [Mar-23-17 04:07PM  24/7 Wall St.]
Stock chart of DLTR Financial statements of DLTR Annual reports of DLTR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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