Dollar Tree, Inc. DLTR is slated to release first-quarter fiscal 2017 results on May 25. The question lingering in investors’ minds is whether this departmental store retailer will be able to deliver a positive earnings surprise in the quarter to be reported. In the trailing four quarters, the company outperformed the Zacks Consensus Estimate by an average of 4.2%. Let’s see how things are shaping up prior to this announcement.

Dollar Tree, Inc. Price and EPS Surprise
 

Dollar Tree, Inc. Price and EPS Surprise | Dollar Tree, Inc. Quote

What to Expect?

The current Zacks Consensus Estimate for the quarter under review is 99 cents, reflecting a year-over year increase of 11.2%. Further, we noted that the Zacks Consensus Estimate been stable in the past 30 days. Additionally, analysts polled by Zacks expect revenues of $5.3 billion, up about 4.1% from the year-ago quarter.

Dollar Tree forms part of the Retail-Wholesale sector. Per the latest Earnings Preview report, as of May 19, Retail-Wholesale sector’s earnings are expected to inch up 0.8%, with 3.4% revenues growth.

Factors at Play

Dollar Tree has outperformed the Zacks categorized Retail – Discount & Variety industry over the last three months, with its shares up 1.9%, as against the industry’s decline of 4.5%. After an impressive fiscal 2016, which witnessed record earnings and sales over $20 billion, management revealed that it is progressing well with Family Dollar’s integration. The company further stated that it is well on track with its expansion efforts for both Dollar Tree and Family Dollar. The company intends to attract shoppers and enhance customer experience with its diverse reach and desired products. Moreover, Dollar Tree is progressing well with its growth initiatives, which include store expansion strategies, enhancing store productivity, tapping new markets and incorporating innovative sales channels. Additionally, the company’s strategic investments in technological advancements and acquisitions reflect promise. These factors also helped the company to post its 36th straight quarter of comps improvement in the last reported quarter.

All said, management believes that the company is well placed in the broad retail space, to deliver long-term value to shareholders. For the fiscal first quarter, consolidated sales are projected in the range of $5.26–$5.35 billion, driven by comps growth in the flat to low single-digit increase range for the combined entity. Management projected earnings in the range of 91 – 98 cents per share, compared with adjusted earnings of 89 cents reported in the same year-ago period.

However, the company’s global presence keeps it prone to foreign currency headwinds, as was witnessed in the fourth quarter too. While the incorporation of Family Dollar is expected to generate synergies in the long run, the increased costs and cannibalization are expected to continue to affect results throughout the integration and re-banner process. Given the mixed signals, let’s wait and see if Dollar Tree can maintain its positive surprise streak this time around.

What the Zacks Model Unveils?

Our proven model does not conclusively show that Dollar Tree to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dollar Tree currently carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 99 cents. The combination of Dollar Tree’s Zacks Rank #3 and a 0.00% ESP makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

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:

Best Buy Co., Inc. BBY has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ulta Beauty Inc. ULTA has an Earnings ESP of +0.56% and a Zacks Rank #2.

Lowe's Companies, Inc. LOW has an Earnings ESP of +0.94% and a Zacks Rank #3.

Zacks' 2017 IPO Watch List

Before looking into the stocks mentioned above, you may want to get a head start on potential tech IPOs that are popping up on Zacks' radar. Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the current scoop on 5 that may go public at any time.

One has driven from 0 to a $68 billion valuation in 8 years. Four others are a little less obvious but already show jaw-dropping growth. Download this IPO Watch List today for free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Click for Free Lowe's Companies, Inc. (LOW) Stock Analysis Report >>
 
Click for Free Best Buy Co., Inc. (BBY) Stock Analysis Report >>
 
Click for Free Dollar Tree, Inc. (DLTR) Stock Analysis Report >>
 
Click for Free Ulta Beauty Inc. (ULTA) Stock Analysis Report >>
 
To read this article on Zacks.com click here.