Dollarama

Dollarama Q3 2018 EPS $1.15 vs. estimates of $1.11
Financial Highlights

-Dollarama’s revenue totalled $810.6 million, up from $738.7 million.

-EPS of $1.15, up from $0.92 a year ago.

-Comparable store sales grew 4.6%.

-Average transaction size grew 4.5%.

-0.1% increase in the number of transactions.

-Margin forecast for the year was below the mid point of estimates, at 38.5% to 39.5%.

-Dollarama has 1 135 stores open, up from 1 069 stores a year ago.

Key Metrics

-Dividend growth 5-year average: 16.0%

-EPS growth 5-year average: 26.4%

Recommendation: Buy on Weakness

-Dollarama’s stock is up 25.63% since my last Earnings Report, excluding dividends, and any negative news can result in a large selloff, as the stock (TSE: DOL) was down ~10% at the open.

-The decrease in margin forecast would be the main factor to the stock’s negative reaction.

-The continued growth of the middle class in Canada will be a large driver of Dollarama’s future returns as they continue to open more stores.

-One of the TSX’s biggest winners for 2017, further gains can prove difficult as competition continues to increase and investors take profits.

Disclosure

I, Jared Flomen, do not own shares in Dollarama.

Please consult a financial advisor before making investment decision. This report represents my views, not actionable advice.