3 Reasons To Remain Cautious On Dollar Tree Despite Q3 Beat

After reporting strong Q3 earnings before market open Tuesday, investors flocked to Dollar Tree, Inc (NASDAQ: DLTR).

Looking past the positive results, Barclays analyst Karen Short advised investors to remain cautious. She maintains an Equal-Weight rating and $84 price target on the stock while raising her Q4 and 2016 estimates.

“(Street) consensus for FY17 and FY18 are too optimistic,” said the analyst, “especially when we consider the changing competitive landscape.”

Words Of Warning

Short advised investors to keep a number of challenges in mind going forward:

• Fuel costs and ocean freight will become more of a headwind.
• The new Fair Labor Standards Act changes.
• Dollar Tree's Family Dollar segment will need to address pricing to match an “intense competitive environment in the Southeast.”

At time of writing, shares of Dollar Tree were trading at $88.68.