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Avery Schumer

Which Has Better Value, Dollar Tree Or Dollar General?

MKM Partners expects an in-line comp, but potential for EPS upside when Dollar Tree, Inc.  reports fourth-quarter results on March 1. But, the brokerage continues to prefer Dollar General Corp. , which reports on March 16.

Analyst Patrick McKeever, who has a Neutral rating on the Dollar Tree stock, still expects EPS of $1.29 for Dollar Tree versus the Street's $1.32 and guidance of $1.24–$1.33. The analyst projects comps of 2 percent.

McKeever sees potential for EPS upside on the stalling of the FLSA overtime rules that were supposed to go into effect Dec. 1, 2016. Dollar Tree guided for a $0.03–$0.04 impact.

“We look for continued margin expansion at Dollar Tree (modeling OM up 35 bps to 15.4 percent), driven in part by the cycling of markdowns taken in 4Q15 related to the Deals' re-bannering,” McKeever wrote in a note.

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