Dollar Tree Stores (DLTR): Stock With Unusual Social Activity

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Dollar Tree Stores ( DLTR) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified Dollar Tree Stores as such a stock due to the following factors:

  • DLTR has more that 20x the normal benchmarked social activity for this time of the day compared to its average of 3.55 mentions/day.
  • DLTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $160.1 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on DLTR:

Dollar Tree, Inc. operates discount variety stores in the United States and Canada. Its stores offer merchandise at the fixed price of $1.00. DLTR has a PE ratio of 27. Currently there are 10 analysts that rate Dollar Tree Stores a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Dollar Tree Stores has been 2.3 million shares per day over the past 30 days. Dollar Tree Stores has a market cap of $16.2 billion and is part of the services sector and retail industry. Shares are up 10.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Dollar Tree Stores as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • DLTR's revenue growth has slightly outpaced the industry average of 2.2%. Since the same quarter one year prior, revenues rose by 10.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.00, which illustrates the ability to avoid short-term cash problems.
  • 39.28% is the gross profit margin for DOLLAR TREE INC which we consider to be strong. It has increased from the same quarter the previous year.
  • DOLLAR TREE INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DOLLAR TREE INC increased its bottom line by earning $2.90 versus $2.75 in the prior year. This year, the market expects an improvement in earnings ($3.49 versus $2.90).
  • Net operating cash flow has increased to $538.30 million or 26.15% when compared to the same quarter last year. Despite an increase in cash flow, DOLLAR TREE INC's average is still marginally south of the industry average growth rate of 30.18%.

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