Should You Buy Dollarama Ahead of Earnings?
Dollarama (TSX:DOL) is a Montreal-based company that operates a chain of dollar stores throughout Canada. Indeed, it is the largest dollar store chain in the Canadian market. Shares of Dollarama have dropped 3.1% month-over-month as of close on May 25. The stock is still up 2.9% so far in 2023.
This company is expected to release its first quarter fiscal 2024 earnings before the Canadian market opens on Wednesday, June 7. In the fourth quarter of fiscal 2023, Dollarama delivered sales growth of 20% to $1.47 billion. Meanwhile, it reported comparable store sales growth of 155 compared to the previous year. Dollarama opened 24 net new stores as EBITDA increased 18% to $467 million.
For the full year, the company saw sales increase 16% to $5.05 billion. Dollarama's bottom line was positively impacted by new store openings. Moreover, it posted comparable store sales growth of 12%. EBITDA also rose 18% for the full year to $1.52 billion. Meanwhile, diluted net earnings per share (EPS) increased 26% year-over-year to $2.76.
Looking ahead, management expects that Dollarama will continue to benefit from strong consumer demand in the dollar store space. Indeed, high product costs and a per capita recession should drive even more consumers into the arms of dollar stores for the essentials. The company projects comparable store sales growth between 5% and 6% for fiscal 2024.
Shares of Dollarama currently possess a middling price-to-earnings ratio of 29. Moreover, the stock offers a quarterly distribution of $0.0708 per common share. That represents a modest 0.3% yield.
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