Dollar Tree's (DLTR) fiscal first-quarter earnings could fall short of Wall Street's estimates amid potential oil price headwinds, which may prompt the discount retailer to cut its full-year outlook, Oppenheimer said Wednesday.
The brokerage now expects the company to log earnings of $1.45 a share for the three-month period when it reports May 28, down from its prior outlook of $1.55, which is also the Street's view. In March, the company said it expected first-quarter adjusted EPS of $1.45 to $1.60.
"We have moved to the low end of the guidance range to reflect likely diesel headwinds and more conservative (comparable) assumptions given current consumer dynamics and recent pricing actions at the chain," Oppenheimer analysts, including Rupesh Parikh, said in a note to clients Wednesday.
Investor sentiment surrounding the retailer has been "the most negative" in some time due to elevated diesel prices, the potential for continued traffic decreases and concerns regarding the low-income cohort, according to the brokerage. "We believe some of these fears are valid, especially on the cost and consumer fronts," the analysts said.
Energy prices have surged in the aftermath of the US-Israel war with Iran that started at the end of February, with the crucial Strait of Hormuz effectively shut. A fragile ceasefire between the US and Iran still holds, with the two sides yet to agree on a framework for a permanent peace deal.
Dollar Tree could lower its fiscal 2026 earnings projections to reflect the high oil prices, a "less robust" top-line outlook, and potentially less favorable mix, Oppenheimer said.
In March, the company projected full-year adjusted EPS at $6.50 to $6.90, while the Street is currently looking for $6.70. Since that time, diesel costs have moved up by about $0.50, according to Oppenheimer.
When oil prices surged in 2022 in the wake of Russia's invasion of Ukraine, the retailer's management quantified a $63 million annualized impact for every $1 change in diesel rate for the year, the brokerage said. At the time, the company saw impacts on traffic as customers made less trips at the gas stations.
Dollar Tree shares were up 2% in Wednesday afternoon trade. So far in 2026, the stock has lost 25% in value.
"Based on our review of historical valuation parameters and read of investor sentiment, we see limited downside risk on the print," Oppenheimer said.
Price: $92.26, Change: $+1.65, Percent Change: +1.82%
