Is Dollar Tree Inc (DLTR) overvalued?
On Equity Rank's model estimate, DLTR trades 13% below its fair value. Dollar Tree Inc (DLTR) last closed at $131.14; the multi-method model fair value is $150.88.
| Price | Model fair value | Price vs model |
|---|---|---|
| $131.14 | $150.88 | 13% below |
What the answer rests on
- 4 of 9 valuation methods put DLTR's value above its price and 5 put it below, so the methods disagree.
- To justify today's price, DLTR's free cash flow would need to grow about 3.5% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 57.0% a year.
- DLTR trades at 17.9 times its last year's earnings, against a median of 24.3 for 7 profitable Discount Retail companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 47% below to 1% below the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind DLTR's fair value · What prices assume · Other companies