What Happened?

Shares of discount treasure-hunt retailer Dollar Tree (NASDAQ:DLTR) jumped 8% in the morning session after the company reported fourth-quarter 2024 financial results, which don't matter as much as the announcement to sell the Family Dollar unit (a costly experiment that struggled to generate profits) for roughly $1 billion. This is a far cry from the $8.5 billion the company coughed up to acquire the business in 2015. 

The Family Dollar Q4 and 2024 results were reported as discontinued operations, and Consensus did not take this into account, making comparisons not applicable. 

The stock's positive reaction suggested that markets like management focused their strategy on the more profitable segments and the immediate boost to the company's cash position that the sale provided.

After the initial pop the shares cooled down to $68.96, up 2.6% from previous close.

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What The Market Is Telling Us

Dollar Tree’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 7 months ago when the stock dropped 20.4% on the news that the company reported weak second-quarter earnings results. Its revenue and EPS missed analysts' expectations, and it lowered its full-year revenue guidance. The company noted that the unfavorable macro environment was impacting the purchasing behavior of middle- and higher-income customers and this played a role in the decision to revise the financial forecasts. Overall, this was a weaker quarter.

Dollar Tree is down 9.8% since the beginning of the year, and at $68.96 per share, it is trading 49.3% below its 52-week high of $135.91 from March 2024. Investors who bought $1,000 worth of Dollar Tree’s shares 5 years ago would now be looking at an investment worth $882.52.

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