Head-To-Head Review: Dollar Tree (DLTR) versus PriceSmart (PSMT)
Dollar Tree (NASDAQ: DLTR) and PriceSmart (NASDAQ:PSMT) are both mid-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, earnings, valuation, institutional ownership, profitability, risk and analyst recommendations.
Volatility & Risk
Dollar Tree has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, PriceSmart has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500.
Earnings and Valuation
This table compares Dollar Tree and PriceSmart’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Dollar Tree||$20.92 billion||0.83||$2.30 billion||$3.65||20.14|
|PriceSmart||$2.97 billion||0.83||$184.93 million||$3.08||26.66|
Dollar Tree has higher revenue and earnings than PriceSmart. Dollar Tree is trading at a lower price-to-earnings ratio than PriceSmart, indicating that it is currently the more affordable of the two stocks.
PriceSmart pays an annual dividend of $0.70 per share and has a dividend yield of 0.9%. Dollar Tree does not pay a dividend. PriceSmart pays out 22.7% of its earnings in the form of a dividend.
This table compares Dollar Tree and PriceSmart’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of recent recommendations and price targets for Dollar Tree and PriceSmart, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Dollar Tree currently has a consensus price target of $87.00, indicating a potential upside of 18.37%. PriceSmart has a consensus price target of $102.00, indicating a potential upside of 24.24%. Given PriceSmart’s stronger consensus rating and higher possible upside, analysts plainly believe PriceSmart is more favorable than Dollar Tree.
Institutional and Insider Ownership
91.7% of Dollar Tree shares are held by institutional investors. Comparatively, 73.6% of PriceSmart shares are held by institutional investors. 4.1% of Dollar Tree shares are held by insiders. Comparatively, 28.0% of PriceSmart shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Dollar Tree beats PriceSmart on 9 of the 16 factors compared between the two stocks.
About Dollar Tree
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.
PriceSmart, Inc., through its subsidiaries, is engaged in the international operation of membership shopping in warehouse clubs. In addition, the Company operates distribution centers and offices in the United States. The Company’s segments include the United States, Central America, the Caribbean and Colombia. The Company owns and operates the United States-style membership shopping warehouse clubs in Latin America and the Caribbean. It offers private label consumer goods to individuals and businesses. The Company offers three types of memberships, such as Business, Diamond and in Costa Rica Platinum memberships. It promotes Business membership through its marketing programs and offers certain merchandise targeted to businesses, such as restaurants, hotels, convenience stores, offices and institutions. The Diamond membership is focused on individuals and families. The Company offers Platinum memberships in Costa Rica.
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