Intrinsic value of Dollar Tree - DLTR

Previous Close

$92.37

  Intrinsic Value

$72.27

stock screener

  Rating & Target

sell

-22%

  Value-price divergence*

+32%

Previous close

$92.37

 
Intrinsic value

$72.27

 
Up/down potential

-22%

 
Rating

sell

 
Value-price divergence*

+32%

*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 22.4

 

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
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.11
  5.09
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
Revenue, $m
  20,719
  21,900
  23,133
  24,421
  25,766
  27,173
  28,644
  30,183
  31,793
  33,478
  35,243
  37,091
  39,027
  41,056
  43,182
  45,410
  47,746
  50,195
  52,764
  55,457
  58,282
  61,246
  64,355
  67,618
  71,040
  74,632
  78,401
  82,357
  86,508
  90,865
  95,438
Variable operating expenses, $m
 
  19,112
  20,160
  21,254
  22,397
  23,593
  24,843
  26,150
  27,519
  28,951
  30,450
  31,518
  33,164
  34,887
  36,694
  38,587
  40,572
  42,653
  44,836
  47,125
  49,526
  52,044
  54,686
  57,458
  60,367
  63,419
  66,622
  69,983
  73,510
  77,213
  81,099
Fixed operating expenses, $m
 
  943
  967
  991
  1,016
  1,041
  1,067
  1,094
  1,121
  1,149
  1,178
  1,207
  1,237
  1,268
  1,300
  1,332
  1,366
  1,400
  1,435
  1,471
  1,508
  1,545
  1,584
  1,623
  1,664
  1,706
  1,748
  1,792
  1,837
  1,883
  1,930
Total operating expenses, $m
  19,014
  20,055
  21,127
  22,245
  23,413
  24,634
  25,910
  27,244
  28,640
  30,100
  31,628
  32,725
  34,401
  36,155
  37,994
  39,919
  41,938
  44,053
  46,271
  48,596
  51,034
  53,589
  56,270
  59,081
  62,031
  65,125
  68,370
  71,775
  75,347
  79,096
  83,029
Operating income, $m
  1,705
  1,845
  2,007
  2,176
  2,353
  2,539
  2,734
  2,939
  3,154
  3,379
  3,615
  4,366
  4,627
  4,900
  5,188
  5,490
  5,808
  6,142
  6,493
  6,862
  7,249
  7,657
  8,085
  8,536
  9,010
  9,508
  10,031
  10,582
  11,161
  11,770
  12,410
EBITDA, $m
  2,343
  2,721
  2,903
  3,095
  3,295
  3,505
  3,725
  3,956
  4,198
  4,452
  4,718
  4,998
  5,292
  5,600
  5,924
  6,264
  6,622
  6,997
  7,392
  7,807
  8,243
  8,701
  9,182
  9,689
  10,221
  10,780
  11,368
  11,986
  12,635
  13,318
  14,036
Interest expense (income), $m
  329
  296
  323
  351
  381
  412
  445
  478
  514
  551
  590
  631
  673
  718
  764
  813
  865
  919
  975
  1,034
  1,096
  1,161
  1,230
  1,301
  1,377
  1,455
  1,538
  1,625
  1,716
  1,812
  1,912
Earnings before tax, $m
  1,329
  1,549
  1,684
  1,825
  1,972
  2,127
  2,290
  2,461
  2,640
  2,828
  3,025
  3,735
  3,953
  4,183
  4,424
  4,677
  4,943
  5,223
  5,518
  5,827
  6,153
  6,495
  6,856
  7,235
  7,633
  8,052
  8,493
  8,957
  9,445
  9,958
  10,497
Tax expense, $m
  433
  418
  455
  493
  533
  574
  618
  664
  713
  763
  817
  1,009
  1,067
  1,129
  1,194
  1,263
  1,335
  1,410
  1,490
  1,573
  1,661
  1,754
  1,851
  1,953
  2,061
  2,174
  2,293
  2,418
  2,550
  2,689
  2,834
Net income, $m
  896
  1,131
  1,229
  1,332
  1,440
  1,553
  1,672
  1,796
  1,927
  2,064
  2,208
  2,727
  2,886
  3,053
  3,229
  3,414
  3,609
  3,813
  4,028
  4,254
  4,492
  4,742
  5,005
  5,281
  5,572
  5,878
  6,200
  6,539
  6,895
  7,269
  7,663

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
  15,676
  16,559
  17,481
  18,444
  19,451
  20,504
  21,605
  22,758
  23,965
  25,228
  26,551
  27,937
  29,389
  30,910
  32,505
  34,177
  35,931
  37,769
  39,697
  41,720
  43,841
  46,067
  48,402
  50,852
  53,423
  56,121
  58,953
  61,924
  65,043
  68,317
Adjusted assets (=assets-cash), $m
  14,832
  15,676
  16,559
  17,481
  18,444
  19,451
  20,504
  21,605
  22,758
  23,965
  25,228
  26,551
  27,937
  29,389
  30,910
  32,505
  34,177
  35,931
  37,769
  39,697
  41,720
  43,841
  46,067
  48,402
  50,852
  53,423
  56,121
  58,953
  61,924
  65,043
  68,317
Revenue / Adjusted assets
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
  1.397
Average production assets, $m
  6,226
  6,570
  6,940
  7,326
  7,730
  8,152
  8,593
  9,055
  9,538
  10,044
  10,573
  11,127
  11,708
  12,317
  12,955
  13,623
  14,324
  15,059
  15,829
  16,637
  17,485
  18,374
  19,307
  20,285
  21,312
  22,390
  23,520
  24,707
  25,952
  27,260
  28,631
Working capital, $m
  1,832
  1,183
  1,249
  1,319
  1,391
  1,467
  1,547
  1,630
  1,717
  1,808
  1,903
  2,003
  2,107
  2,217
  2,332
  2,452
  2,578
  2,711
  2,849
  2,995
  3,147
  3,307
  3,475
  3,651
  3,836
  4,030
  4,234
  4,447
  4,671
  4,907
  5,154
Total debt, $m
  6,446
  6,872
  7,477
  8,108
  8,768
  9,458
  10,179
  10,934
  11,723
  12,550
  13,415
  14,321
  15,271
  16,265
  17,308
  18,400
  19,546
  20,747
  22,006
  23,327
  24,712
  26,165
  27,690
  29,289
  30,968
  32,729
  34,577
  36,516
  38,552
  40,688
  42,931
Total liabilities, $m
  10,312
  10,738
  11,343
  11,974
  12,634
  13,324
  14,045
  14,800
  15,589
  16,416
  17,281
  18,187
  19,137
  20,131
  21,174
  22,266
  23,412
  24,613
  25,872
  27,193
  28,578
  30,031
  31,556
  33,155
  34,834
  36,595
  38,443
  40,382
  42,418
  44,554
  46,797
Total equity, $m
  5,390
  4,938
  5,216
  5,506
  5,810
  6,127
  6,459
  6,806
  7,169
  7,549
  7,947
  8,363
  8,800
  9,257
  9,737
  10,239
  10,766
  11,318
  11,897
  12,505
  13,142
  13,810
  14,511
  15,247
  16,018
  16,828
  17,678
  18,570
  19,506
  20,489
  21,520
Total liabilities and equity, $m
  15,702
  15,676
  16,559
  17,480
  18,444
  19,451
  20,504
  21,606
  22,758
  23,965
  25,228
  26,550
  27,937
  29,388
  30,911
  32,505
  34,178
  35,931
  37,769
  39,698
  41,720
  43,841
  46,067
  48,402
  50,852
  53,423
  56,121
  58,952
  61,924
  65,043
  68,317
Debt-to-equity ratio
  1.196
  1.390
  1.430
  1.470
  1.510
  1.540
  1.580
  1.610
  1.640
  1.660
  1.690
  1.710
  1.740
  1.760
  1.780
  1.800
  1.820
  1.830
  1.850
  1.870
  1.880
  1.890
  1.910
  1.920
  1.930
  1.940
  1.960
  1.970
  1.980
  1.990
  1.990
Adjusted equity ratio
  0.305
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315
  0.315

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  896
  1,131
  1,229
  1,332
  1,440
  1,553
  1,672
  1,796
  1,927
  2,064
  2,208
  2,727
  2,886
  3,053
  3,229
  3,414
  3,609
  3,813
  4,028
  4,254
  4,492
  4,742
  5,005
  5,281
  5,572
  5,878
  6,200
  6,539
  6,895
  7,269
  7,663
Depreciation, amort., depletion, $m
  638
  876
  897
  919
  942
  966
  991
  1,017
  1,044
  1,073
  1,103
  632
  665
  700
  736
  774
  814
  856
  899
  945
  993
  1,044
  1,097
  1,153
  1,211
  1,272
  1,336
  1,404
  1,475
  1,549
  1,627
Funds from operations, $m
  1,811
  2,007
  2,126
  2,251
  2,381
  2,519
  2,662
  2,813
  2,971
  3,137
  3,312
  3,359
  3,551
  3,753
  3,965
  4,188
  4,422
  4,669
  4,927
  5,199
  5,485
  5,786
  6,102
  6,434
  6,783
  7,150
  7,536
  7,942
  8,369
  8,818
  9,290
Change in working capital, $m
  138
  64
  67
  70
  73
  76
  79
  83
  87
  91
  95
  100
  105
  110
  115
  120
  126
  132
  139
  145
  153
  160
  168
  176
  185
  194
  204
  214
  224
  235
  247
Cash from operations, $m
  1,673
  1,943
  2,059
  2,181
  2,309
  2,443
  2,583
  2,730
  2,884
  3,046
  3,216
  3,259
  3,447
  3,644
  3,850
  4,068
  4,296
  4,536
  4,789
  5,054
  5,333
  5,626
  5,934
  6,258
  6,598
  6,956
  7,333
  7,729
  8,145
  8,583
  9,043
Maintenance CAPEX, $m
  0
  -354
  -373
  -394
  -416
  -439
  -463
  -488
  -514
  -542
  -571
  -601
  -632
  -665
  -700
  -736
  -774
  -814
  -856
  -899
  -945
  -993
  -1,044
  -1,097
  -1,153
  -1,211
  -1,272
  -1,336
  -1,404
  -1,475
  -1,549
New CAPEX, $m
  -566
  -344
  -370
  -386
  -404
  -422
  -441
  -462
  -483
  -506
  -529
  -554
  -581
  -609
  -638
  -668
  -701
  -735
  -771
  -808
  -848
  -889
  -933
  -979
  -1,027
  -1,078
  -1,131
  -1,187
  -1,245
  -1,307
  -1,372
Cash from investing activities, $m
  -484
  -698
  -743
  -780
  -820
  -861
  -904
  -950
  -997
  -1,048
  -1,100
  -1,155
  -1,213
  -1,274
  -1,338
  -1,404
  -1,475
  -1,549
  -1,627
  -1,707
  -1,793
  -1,882
  -1,977
  -2,076
  -2,180
  -2,289
  -2,403
  -2,523
  -2,649
  -2,782
  -2,921
Free cash flow, $m
  1,189
  1,245
  1,316
  1,400
  1,489
  1,581
  1,678
  1,780
  1,887
  1,999
  2,116
  2,104
  2,234
  2,370
  2,513
  2,663
  2,821
  2,988
  3,162
  3,346
  3,540
  3,743
  3,957
  4,182
  4,419
  4,668
  4,930
  5,206
  5,496
  5,801
  6,122
Issuance/(repayment) of debt, $m
  -1,074
  578
  605
  631
  660
  690
  721
  755
  790
  826
  865
  906
  949
  995
  1,042
  1,093
  1,145
  1,201
  1,259
  1,321
  1,385
  1,453
  1,525
  1,600
  1,678
  1,761
  1,848
  1,940
  2,036
  2,136
  2,242
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
  578
  605
  631
  660
  690
  721
  755
  790
  826
  865
  906
  949
  995
  1,042
  1,093
  1,145
  1,201
  1,259
  1,321
  1,385
  1,453
  1,525
  1,600
  1,678
  1,761
  1,848
  1,940
  2,036
  2,136
  2,242
Total cash flow (excl. dividends), $m
  130
  1,823
  1,921
  2,032
  2,149
  2,271
  2,400
  2,535
  2,676
  2,825
  2,982
  3,010
  3,183
  3,364
  3,555
  3,756
  3,967
  4,189
  4,422
  4,667
  4,925
  5,196
  5,482
  5,782
  6,097
  6,429
  6,778
  7,145
  7,531
  7,937
  8,364
Retained Cash Flow (-), $m
  -983
  -266
  -278
  -290
  -303
  -317
  -332
  -347
  -363
  -380
  -398
  -417
  -437
  -457
  -479
  -502
  -527
  -552
  -579
  -607
  -637
  -668
  -701
  -736
  -772
  -810
  -850
  -892
  -936
  -982
  -1,031
Prev. year cash balance distribution, $m
 
  718
  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
 
  2,275
  1,643
  1,742
  1,845
  1,954
  2,068
  2,188
  2,313
  2,445
  2,584
  2,594
  2,746
  2,907
  3,076
  3,253
  3,440
  3,636
  3,843
  4,060
  4,288
  4,528
  4,780
  5,046
  5,325
  5,619
  5,928
  6,253
  6,595
  6,955
  7,333
Discount rate, %
 
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
 
  2,123
  1,420
  1,385
  1,340
  1,284
  1,220
  1,148
  1,069
  984
  896
  766
  682
  598
  518
  441
  369
  304
  246
  195
  151
  115
  86
  62
  44
  30
  20
  13
  8
  5
  3
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. is an operator of discount variety stores. As of January 28, 2017, the Company operated 14,334 stores in 48 states and the District of Columbia, and five Canadian provinces. Its segments include Dollar Tree and Family Dollar. The Dollar Tree segment is the operator of discount variety stores offering merchandise at a fixed price. The Family Dollar segment operates a chain of general merchandise retail discount stores providing consumers with a selection of merchandise in neighborhood stores. Its stores operate under the names of Dollar Tree, Family Dollar and Dollar Tree Canada. As of January 28, 2017, the Dollar Tree segment included 6,360 stores operating under the Dollar Tree and Dollar Tree Canada brands, 11 distribution centers in the United States and two in Canada and a Store Support Center in Chesapeake, Virginia, and 11 distribution centers and a Store Support Center in Matthews, North Carolina under the Family Dollar brand.

FINANCIAL RATIOS  of  Dollar Tree (DLTR)

Valuation Ratios
P/E Ratio 24.3
Price to Sales 1.1
Price to Book 4
Price to Tangible Book
Price to Cash Flow 13
Price to Free Cash Flow 19.7
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 $20719 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 5.7% 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 7.2%, 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 87.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $920 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 4.7% 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 30%.

Life of production assets of 17.6 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 5.4%. 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 - $5390 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 242.567 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 $22.4 billion.

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TUES Tuesday Mornin 2.80 1.08  sell
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COMPANY NEWS

▶ Stocks With Rising Relative Price Strength: Dollar Tree   [Oct-05-17 03:00AM  Investor's Business Daily]
▶ Trade of the Day: Dollar Tree (DLTR)   [Sep-26-17 09:22AM  InvestorPlace]
▶ Kohls once again teams up with Amazon   [Sep-19-17 01:39PM  Yahoo Finance Video]
▶ [$$] Dollar Tree Promotes Longtime Executive to CEO   [10:24AM  The Wall Street Journal]
▶ Dollar Tree promotes Gary Philbin to CEO   [08:19AM  MarketWatch]
▶ Caseys Didnt Meet Analysts Top-Line Expectations   [Sep-07-17 12:23PM  Market Realist]
▶ Why Dollar Tree, Inc. Stock Jumped 10.5% in August   [Sep-06-17 09:05AM  Motley Fool]
▶ Behind Dollar Generals Fiscal 2Q17 Top Line   [Sep-05-17 03:06PM  Market Realist]
▶ ETFs with exposure to Dollar Tree, Inc. : August 31, 2017   [Aug-31-17 06:05PM  Capital Cube]
▶ Dollar General: Blame Dollar Tree?   [10:29AM  Barrons.com]
▶ What Drove Dollar Trees Earnings Beat in 2Q17?   [Aug-30-17 11:06AM  Market Realist]
▶ Key Takeaways from Dollar Trees 2Q17 Results   [08:06AM  Market Realist]
▶ Ollie's Bargain Outlet Beats Q2 Forecasts But Stock Drifts From Buy Point   [Aug-29-17 04:31PM  Investor's Business Daily]
▶ Retail And E-Commerce News And Stocks To Watch   [10:10AM  Investor's Business Daily]
▶ Company News For August 25, 2017   [09:46AM  Zacks]
▶ Dollar Tree beats Street 2Q forecasts   [Aug-24-17 09:57PM  Associated Press]
▶ 4 Stocks Open Higher   [03:23PM  GuruFocus.com]
▶ Why Dollar Tree, Inc. Stock Popped Today   [02:15PM  Motley Fool]
▶ Dollar Tree sales rise but miss   [10:52AM  Reuters Videos]
▶ Stocks to Watch: Dollar Tree, PVH, HP Inc., Sears, Staples   [09:27AM  The Wall Street Journal]
Financial statements 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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