Name: Dollar Tree Inc. (NASDAQ:DLTR) | Price to FCFE (P/FCFE)
Creator: Stock Analysis on Net

Free Cash Flow to Equity (FCFE)
P to FCFE Ratio, Current
P to FCFE Ratio, Historical

Dollar Tree Inc., FCFE calculation

US$ in thousands

12 months ended:	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017
Net income (loss)	1,327,900)	1,341,900)	827,000)	(1,590,800)	1,714,300)	896,200)
Net noncash charges	836,600)	824,200)	1,060,300)	3,578,800)	248,200)	639,600)
Changes in operating assets and liabilities	(733,000)	550,200)	(17,500)	(222,000)	(452,300)	137,500)
Net cash provided by operating activities	1,431,500)	2,716,300)	1,869,800)	1,766,000)	1,510,200)	1,673,300)
Capital expenditures	(1,021,200)	(898,800)	(1,034,800)	(817,100)	(632,200)	(564,700)
Proceeds from long-term debt, net of discount	1,197,400)	—)	—)	4,775,800)	—)	2,962,500)
Principal payments for long-term debt	(1,000,000)	(550,000)	(500,000)	(6,214,700)	(659,100)	(4,036,200)
Debt-issuance and debt extinguishment costs	(59,300)	—)	—)	(155,300)	—)	(6,100)
Proceeds from revolving credit facility	—)	750,000)	—)	50,000)	—)	140,000)
Repayments of revolving credit facility	—)	(750,000)	—)	(50,000)	—)	(140,000)
Free cash flow to equity (FCFE)	548,400)	1,267,500)	335,000)	(645,300)	218,900)	28,800)

Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).

The financial data reflects a period of significant volatility in cash flows available to equity holders, contrasting with a more consistent, albeit fluctuating, trend in cash generated from core operations.

Operating Cash Flow Trends: Net cash provided by operating activities exhibited a general upward trajectory from 2017 through 2021, rising from 1.67 billion to a peak of 2.72 billion. However, a sharp contraction occurred in the final period, with operating cash flow falling to 1.43 billion, the lowest level recorded in the six-year sequence.
Free Cash Flow to Equity (FCFE) Volatility: FCFE demonstrated extreme variance, characterized by a significant deficit in 2019 where cash flow to equity dropped to negative 645.3 million despite positive operating cash flow. This was followed by a substantial recovery and expansion, culminating in a peak of 1.27 billion in 2021 before retreating to 548.4 million in 2022.
Analysis of Cash Flow Divergence: A notable divergence between operating cash flow and FCFE is evident, particularly in 2019. The transition from positive operating cash of 1.77 billion to negative FCFE suggests a period of intensive capital expenditure or significant debt repayment. Conversely, the 2021 period shows a strong convergence, where a higher percentage of operating cash was retained as free cash flow to equity.
Overall Financial Trajectory: The overall trend indicates a cycle of aggressive investment or deleveraging followed by a period of high liquidity generation. The simultaneous decline in both operating cash flow and FCFE in 2022 suggests a tightening of cash availability at the end of the observed period.

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Dollar Tree Inc., current P/FCFE calculation, comparison to benchmarks

No. shares of common stock outstanding	221,184,479
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in thousands)	548,400)
FCFE per share	2.48
Current share price (P)	152.37
Valuation Ratio
P/FCFE	61.45
Benchmarks
P/FCFE, Competitors¹
Costco Wholesale Corp.	48.26
Target Corp.	22.59
Walmart Inc.	50.89
P/FCFE, Sector
Consumer Staples Distribution & Retail	130.49
P/FCFE, Industry
Consumer Staples	41.33

Based on: 10-K (reporting date: 2022-01-29).

¹ Click competitor name to see calculations.

If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.

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Dollar Tree Inc., historical P/FCFE calculation, comparison to benchmarks

	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017
No. shares of common stock outstanding¹	225,110,329	233,420,925	236,810,841	238,204,351	237,335,999	236,297,936
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in thousands)²	548,400)	1,267,500)	335,000)	(645,300)	218,900)	28,800)
FCFE per share³	2.44	5.43	1.41	-2.71	0.92	0.12
Share price^1, 4	151.06	109.04	75.97	104.22	95.75	76.55
Valuation Ratio
P/FCFE⁵	62.01	20.08	53.70	—	103.81	628.08
Benchmarks
P/FCFE, Competitors⁶
Costco Wholesale Corp.	77.36	37.34	—	—	—	—
Target Corp.	16.91	11.21	—	—	—	—
Walmart Inc.	122.02	18.26	—	—	—	—
P/FCFE, Sector
Consumer Staples Distribution & Retail	59.72	19.62	—	—	—	—
P/FCFE, Industry
Consumer Staples	25.27	24.83	—	—	—	—

Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).

¹ Data adjusted for splits and stock dividends.

² See details »

³ 2022 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 548,400,000 ÷ 225,110,329 = 2.44

⁴ Closing price as at the filing date of Dollar Tree Inc. Annual Report.

⁵ 2022 Calculation
P/FCFE = Share price ÷ FCFE per share
= 151.06 ÷ 2.44 = 62.01

⁶ Click competitor name to see calculations.

The analysis indicates a substantial contraction in the Price to Free Cash Flow to Equity (P/FCFE) ratio between 2017 and 2021, followed by a moderate rebound in 2022. This trajectory suggests a period where cash flow growth significantly outpaced share price appreciation, leading to a more compressed valuation multiple before a recent divergence occurred.

Valuation Multiple Trends: A precipitous decline in the P/FCFE ratio is observed from a peak of 628.08 in 2017 to a low of 20.08 in 2021. The absence of a ratio in 2019 corresponds with a negative FCFE per share of -2.71, rendering the multiple mathematically inapplicable for that period. The subsequent rise to 62.01 in 2022 indicates an expansion of the multiple, driven by a combination of record-high share prices and a reduction in per-share cash flow.
Free Cash Flow to Equity (FCFE) Volatility: FCFE per share demonstrated significant instability, fluctuating from 0.12 in 2017 to a deficit of 2.71 in 2019, before peaking at 5.43 in 2021. The sharp increase in FCFE between 2020 and 2021 acted as the primary driver for the valuation compression seen during those years, as the company's ability to generate cash for equity holders improved rapidly.
Share Price Correlation: The share price trended generally upward, rising from 76.55 in 2017 to 151.06 in 2022, despite a temporary decline in 2020. However, the relationship between price and cash flow became decoupled in 2022; while the share price reached its highest point in the period, FCFE per share declined by more than 50% from its previous year's peak, resulting in the observed increase in the P/FCFE ratio.

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Dollar Tree Inc. (NASDAQ:DLTR)

Price to FCFE (P/FCFE)

Free Cash Flow to Equity (FCFE)

Price to FCFE Ratio, Current

Price to FCFE Ratio, Historical