In a new report, Citi Research analyst Alvin Concepcion pitted dollar store rivals Dollar General Corp. DG 1.03% and Dollar Tree, Inc. DLTR 0.46% head-to-head in a five-part comparison of different aspects of their businesses.
Analysts picked a winner in each category and then declared a champion.
1. Business Model
Despite the fact that both companies are market leaders in the space, Dollar Tree’s acquisition of Family Dollar Stores Inc FDO has gained the company a slight overall market share lead and given Dollar Tree a slight advantage in terms of diversified pricing, merchandising and store location profile.
Winner: Dollar Tree
2. Same-Store Sales growth
Citi is forecasting 3.2 percent growth at Dollar General over the next three years, but only 2.2 percent growth at Dollar Tree as the company deals with the relatively weak recent performance of Family Dollar.
Winner: Dollar General
3. Margin Growth Potential
Citi believes that Dollar General will achieve about a 9.8 percent EBIT margin profile from 2015-2017 versus Dollar Tree’s overall 9.4 percent margins. However, Citi notes the strong opportunities for core margin improvements at Family Dollar as Dollar Tree works out deal synergies in coming years.
Winner: It’s a tie
4. New Store Unit Growth
Citi’s saturation analysis indicates…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
