Will Dollar Tree's (DLTR) Dismal Earnings Continue In Q1?

Dollar Tree Inc. (NASDAQ:DLTR) is set to report first-quarter fiscal 2016 results on May 26. Last quarter, it posted a negative earnings surprise of 2.9%.

Additionally, Dollar Tree underperformed the Zacks Consensus Estimate in each of the trailing four quarters, with an average negative surprise of 19.7%. Let us see how things are shaping up for this announcement.

Factors Influencing this Quarter

Dollar Tree’s underperformance in the preceding quarter was mainly attributed to the impact of a tough consumer environment and costs related to Family Dollar’s integration. Though Family Dollar’s integration is expected to generate synergies and boost the company’s performance in the long run, the aforementioned costs and cannibalization will likely continue affecting results throughout the integration and re-banner process. Together, these factors raise concerns over the company’s performance in the upcoming quarter.

However, the company is on track with its growth endeavors, including store expansion, omni-channel development and foray into new markets. Further, its strategic investments in technological advancements and acquisitions that are focused on boosting its performance bode well. Thus, we would prefer to wait and see what’s in store for Dollar Tree in the quarter to be reported.

Earnings Whispers

Our proven model does not conclusively show that Dollar Tree is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below:

Zacks ESP: Earnings ESP for Dollar Tree is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both are pegged at 81 cents.

Zacks Rank: Dollar Tree currently carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Dave & Buster's Entertainment Inc. (NASDAQ:PLAY) , expected to report earnings on Jun 13, has an Earnings ESP of +3.39% and a Zacks Rank #1 (Strong Buy).

Nike Inc. (NYSE:NKE) , expected to report earnings on Jun 23, has an Earnings ESP of +2.08% and a Zacks Rank #3 (Hold).

Carnival (LON:CCL) Corporation (NYSE:CCL) , expected to report earnings on Jun 28, has an Earnings ESP of +5.26% and a Zacks Rank #3.