In the competitive world of discount retail, Target Corporation (TGT) and Dollar Tree, Inc. (DLTR) stand out as major players offering diverse products at affordable prices. Both companies operate large store networks across the U.S., serving value-conscious consumers but with distinct business models and innovation approaches. This comparison will help you, the investor, identify which company currently presents the most compelling opportunity for your portfolio.
Table of contents
Companies Overview
I will begin the comparison between Target Corporation and Dollar Tree, Inc. by providing an overview of these two companies and their main differences.
Target Overview
Target Corporation operates as a general merchandise retailer in the United States, offering a wide range of products including food assortments, apparel, electronics, toys, beauty, and household essentials. The company enhances its customer experience with in-store amenities like Target Café and Starbucks. With approximately 2,000 stores, Target holds a strong position in the discount store sector, serving diverse consumer needs from its Minneapolis headquarters.
Dollar Tree Overview
Dollar Tree, Inc. runs discount variety retail stores through its Dollar Tree and Family Dollar segments. Dollar Tree stores offer fixed-price merchandise primarily at $1.25, including consumables, variety goods, and seasonal items. Family Dollar stores provide general merchandise and apparel at discount prices. Operating over 16,000 stores combined, Dollar Tree targets value-conscious shoppers and maintains a significant footprint across the US and Canada from its base in Chesapeake, Virginia.
Key similarities and differences
Both Target and Dollar Tree operate in the discount stores industry, serving cost-sensitive consumers with broad product ranges. Target focuses on a more upscale general merchandise mix with additional in-store services, while Dollar Tree emphasizes fixed-price and deeply discounted variety goods through its two distinct store brands. Target’s larger store count and employee base contrast with Dollar Tree’s extensive network of smaller-format stores, reflecting differing business models within the discount retail sector.
Income Statement Comparison
The table below presents a side-by-side comparison of key income statement metrics for Target Corporation and Dollar Tree, Inc. for the fiscal year 2024.
| Metric | Target Corporation | Dollar Tree, Inc. |
|---|---|---|
| Market Cap | 48.2B | 28.8B |
| Revenue | 106.6B | 17.6B |
| EBITDA | 8.68B | 2.02B |
| EBIT | 5.70B | 1.49B |
| Net Income | 4.09B | -3.03B |
| EPS | 8.89 | -14.05 |
| Fiscal Year | 2024 | 2024 |
Income Statement Interpretations
Target Corporation
Target’s revenue showed a modest overall growth of 13.9% from 2020 to 2024 but declined slightly by 0.79% in the latest year, indicating a recent slowdown. Net income decreased by 6.34% over the period, with a net margin contraction of 17.77%, reflecting margin pressures. For 2024, earnings per share fell by 0.89%, and operating profit declined 2.2%, signaling weakening profitability.
Dollar Tree, Inc.
Dollar Tree experienced a 31.09% revenue decline over the 2020–2024 period but achieved a 4.75% revenue increase in the most recent year. Despite favorable gross margin at 35.81%, net margin remains deeply negative at -17.24%. Net income and EPS deteriorated steeply, falling over 300% across the period, with significant losses in 2024, showing ongoing profitability challenges.
Which one has the stronger fundamentals?
Both companies face income statement challenges, but Target displays more stable revenue growth and positive EPS trends overall, albeit with recent softness. Dollar Tree’s revenue has contracted substantially, coupled with large net losses and worsening margins. While both have unfavorable global income assessments, Target’s more consistent profitability and margin levels suggest relatively stronger fundamentals compared to Dollar Tree.
Financial Ratios Comparison
Below is a comparison of key financial ratios for Target Corporation (TGT) and Dollar Tree, Inc. (DLTR) based on their most recent fiscal year 2024 data.
| Ratios | Target Corporation (TGT) | Dollar Tree, Inc. (DLTR) |
|---|---|---|
| ROE | 27.9% | -76.2% |
| ROIC | 11.2% | 9.2% |
| P/E | 15.5 | -5.2 |
| P/B | 4.33 | 3.98 |
| Current Ratio | 0.94 | 1.06 |
| Quick Ratio | 0.32 | 0.75 |
| D/E (Debt-to-Equity) | 1.36 | 1.97 |
| Debt-to-Assets | 34.4% | 42.0% |
| Interest Coverage | 13.7 | 13.6 |
| Asset Turnover | 1.84 | 0.94 |
| Fixed Asset Turnover | 2.90 | 2.03 |
| Payout ratio | 50.0% | 0% |
| Dividend yield | 3.22% | 0% |
Interpretation of the Ratios
Target Corporation
Target shows several favorable ratios, including a strong return on equity at 27.89% and a return on invested capital of 11.25%, indicating effective management and profitability. However, concerns arise with a low current ratio of 0.94 and a high debt-to-equity ratio of 1.36, signaling potential liquidity and leverage risks. The company pays dividends with a 3.22% yield, supported by sustainable free cash flow coverage and balanced buybacks.
Dollar Tree, Inc.
Dollar Tree’s ratios reveal challenges, such as a negative net margin of -17.24% and a sharply negative return on equity at -76.18%, which raise profitability concerns. Its current ratio is 1.06, slightly better than Target’s, but the debt-to-equity ratio at 1.97 is relatively high. Dollar Tree does not pay dividends, likely reflecting its negative net income and ongoing reinvestment in operations or acquisitions.
Which one has the best ratios?
Target Corporation holds a more favorable overall ratio profile with higher profitability and dividend returns, despite some liquidity concerns. Dollar Tree’s ratios suggest weaker profitability and higher leverage, compounded by the absence of dividends. Based on these evaluations, Target presents stronger financial ratios relative to Dollar Tree.
Strategic Positioning
This section compares the strategic positioning of Target Corporation and Dollar Tree, Inc., including market position, key segments, and exposure to technological disruption:
Target Corporation
- Large market cap of 48B in discount stores facing NYSE competition.
- Diverse segments: apparel, beauty, food, hardlines, home furnishings, and credit card profit sharing.
- Operates about 2,000 stores plus digital channels; no explicit technological disruption mentioned.
Dollar Tree, Inc.
- Mid-sized market cap of 29B in discount variety retail with NASDAQ listing.
- Two main segments: Dollar Tree fixed-price stores and Family Dollar general merchandise stores.
- Operates 8,000+ stores in Dollar Tree and 8,000+ stores Family Dollar; no explicit technological disruption mentioned.
Target Corporation vs Dollar Tree, Inc. Positioning
Target shows a highly diversified product range spanning multiple merchandise categories, while Dollar Tree concentrates on fixed-price and general merchandise segments. Target’s broader diversification offers varied revenue sources; Dollar Tree’s focused approach centers on value retailing.
Which has the best competitive advantage?
Dollar Tree’s MOAT is rated Very Favorable with growing ROIC, indicating durable competitive advantage and increasing profitability. Target’s MOAT is Slightly Favorable with declining ROIC, suggesting value creation but weakening profitability over time.
Stock Comparison
The stock price movements of Target Corporation (TGT) and Dollar Tree, Inc. (DLTR) over the past year reveal significant declines, followed by notable recent recoveries and shifts in trading dynamics.
Trend Analysis
Target Corporation’s stock showed a bearish trend over the past 12 months with a -29.93% price change and accelerating decline, hitting a low of 85.53. Recently, it rebounded 14.47%, signaling a short-term recovery.
Dollar Tree, Inc. also experienced a bearish trend with a -5.92% price change over the year and accelerating downward momentum, reaching a low of 61.41. Its recent 38.46% gain reflects a stronger recovery phase.
Comparing both, Dollar Tree’s stock delivered the highest market performance in the recent period, outperforming Target in price rebound and buyer dominance.
Target Prices
The current target price consensus for these retailers reflects mixed analyst expectations.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Target Corporation | 120 | 80 | 96.14 |
| Dollar Tree, Inc. | 150 | 75 | 125.33 |
Analysts see Dollar Tree with a higher upside potential compared to Target, with Dollar Tree’s consensus target above its current price, while Target’s consensus suggests a slight downside from its current price.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Target Corporation and Dollar Tree, Inc.:
Rating Comparison
Target Corporation Rating
- Rating: B+, classified as Very Favorable
- Discounted Cash Flow Score: 4, indicating a Favorable DCF
- Return on Equity Score: 5, a Very Favorable metric
- Return on Assets Score: 4, showing Favorable asset use
- Debt To Equity Score: 1, indicating Very Unfavorable debt
- Overall Score: 3, indicating Moderate overall performance
Dollar Tree, Inc. Rating
- Rating: D+, classified as Very Favorable
- Discounted Cash Flow Score: 2, indicating Moderate
- Return on Equity Score: 1, classified as Very Unfavorable
- Return on Assets Score: 1, classified as Very Unfavorable
- Debt To Equity Score: 1, also Very Unfavorable
- Overall Score: 1, indicating Very Unfavorable
Which one is the best rated?
Based strictly on the provided data, Target Corporation holds significantly higher ratings and scores across most financial metrics compared to Dollar Tree, Inc., reflecting a stronger overall analyst evaluation.
Scores Comparison
Here is a comparison of Target Corporation and Dollar Tree, Inc. based on their financial scores:
Target Corporation Scores
- Altman Z-Score: 2.89, in the grey zone indicating moderate bankruptcy risk.
- Piotroski Score: 7, classified as strong financial health.
Dollar Tree, Inc. Scores
- Altman Z-Score: 3.49, in the safe zone indicating low bankruptcy risk.
- Piotroski Score: 4, classified as average financial health.
Which company has the best scores?
Dollar Tree’s Altman Z-Score places it in a safer financial position compared to Target’s grey zone score. However, Target shows stronger financial health with a higher Piotroski Score. The scores reflect different strengths for each company.
Grades Comparison
Here is a comparison of the recent grades assigned to Target Corporation and Dollar Tree, Inc.:
Target Corporation Grades
The following table summarizes Target Corporation’s recent grades from recognized grading companies:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Wolfe Research | Maintain | Underperform | 2025-12-30 |
| Evercore ISI Group | Maintain | In Line | 2025-12-09 |
| Argus Research | Maintain | Buy | 2025-12-01 |
| Bernstein | Maintain | Underperform | 2025-11-20 |
| Evercore ISI Group | Maintain | In Line | 2025-11-20 |
| Roth Capital | Maintain | Neutral | 2025-11-20 |
| B of A Securities | Maintain | Underperform | 2025-11-20 |
| Mizuho | Maintain | Neutral | 2025-11-20 |
| Piper Sandler | Maintain | Neutral | 2025-11-20 |
| Citigroup | Maintain | Neutral | 2025-11-20 |
Target’s grades show a mix of underperform, neutral, and in line ratings, with only one buy rating, indicating a cautious stance among analysts.
Dollar Tree, Inc. Grades
The following table summarizes Dollar Tree, Inc.’s recent grades from recognized grading companies:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Barclays | Maintain | Overweight | 2026-01-08 |
| Bernstein | Maintain | Market Perform | 2026-01-05 |
| Wells Fargo | Maintain | Overweight | 2025-12-19 |
| Barclays | Maintain | Overweight | 2025-12-09 |
| Morgan Stanley | Maintain | Equal Weight | 2025-12-08 |
| Evercore ISI Group | Maintain | In Line | 2025-12-04 |
| Telsey Advisory Group | Maintain | Outperform | 2025-12-04 |
| B of A Securities | Maintain | Underperform | 2025-12-04 |
| Guggenheim | Maintain | Buy | 2025-12-04 |
| Wells Fargo | Maintain | Overweight | 2025-12-04 |
Dollar Tree’s grades predominantly lean toward overweight and outperform ratings, with fewer underperform assessments, suggesting more positive analyst sentiment.
Which company has the best grades?
Dollar Tree, Inc. has received generally more favorable grades than Target Corporation, with a higher proportion of overweight, outperform, and buy ratings. This difference could influence investors seeking growth potential or higher confidence from analysts in Dollar Tree’s outlook compared to Target’s more mixed and cautious assessments.
Strengths and Weaknesses
Below is a comparative table summarizing the key strengths and weaknesses of Target Corporation (TGT) and Dollar Tree, Inc. (DLTR) based on the most recent data available.
| Criterion | Target Corporation (TGT) | Dollar Tree, Inc. (DLTR) |
|---|---|---|
| Diversification | Highly diversified product portfolio including Apparel, Food & Beverage, Beauty, and Home Furnishings with revenues exceeding 16B in several categories. | Moderate diversification primarily through Dollar Tree and Family Dollar segments, with combined revenues around 31B. |
| Profitability | Creating value with ROIC at 11.25% above WACC (7.31%), but experiencing a declining ROIC trend; net margin is low at 3.84%. | Also creating value with ROIC near 9.17%, showing a growing ROIC trend; however, profitability ratios like net margin and ROE are unfavorable (negative). |
| Innovation | Strong focus on digital and credit card profit sharing contributing over 0.5B, demonstrating innovation in revenue streams. | Limited innovation evident, with no significant revenue diversification beyond core retail segments. |
| Global presence | Primarily US-based with strong nationwide footprint; no significant global operations reported. | Also US-focused with substantial presence through two store brands; no global expansion. |
| Market Share | Large market share in general merchandise and food retail sectors in the US. | Significant share in discount retail segment, with steady revenue growth in both Dollar Tree and Family Dollar. |
Key takeaways: Target shows strong diversification and profitability but faces challenges with declining returns. Dollar Tree has a more focused business with improving ROIC but struggles with profitability metrics. Both companies have solid US market positions but limited global reach. Investors should weigh Target’s broader portfolio against Dollar Tree’s improving operational efficiency.
Risk Analysis
Below is a comparative table summarizing key risks for Target Corporation (TGT) and Dollar Tree, Inc. (DLTR) as of 2024:
| Metric | Target Corporation (TGT) | Dollar Tree, Inc. (DLTR) |
|---|---|---|
| Market Risk | Beta 1.12, moderate volatility | Beta 0.75, lower volatility |
| Debt level | Debt-to-Equity 1.36 (unfavorable) | Debt-to-Equity 1.97 (unfavorable) |
| Regulatory Risk | Moderate, retail sector focus | Moderate, discount retail segment |
| Operational Risk | Large store network (~2,000 stores) | Extensive operations (16,000+ stores) |
| Environmental Risk | Standard retail footprint | Similar retail environmental impact |
| Geopolitical Risk | Primarily US exposure | US and Canada exposure |
In synthesis, Dollar Tree carries higher financial risk due to significantly unfavorable leverage metrics and negative profitability indicators, despite a safer Altman Z-Score. Target faces moderate market volatility but benefits from stronger profitability and cash flow metrics. The most impactful risk for both remains high debt levels, which could constrain flexibility amid economic downturns. Investors should weigh Target’s stronger operational efficiency against Dollar Tree’s leverage concerns carefully.
Which Stock to Choose?
Target Corporation (TGT) shows a mixed income evolution with a slight revenue decline recently but overall growth since 2020. Its profitability ratios like ROE (27.9%) and ROIC (11.3%) are favorable, though net margin is low at 3.84%. Debt levels are moderate with a net debt to EBITDA of 1.74, while the rating stands at a strong B+ with a slightly favorable global ratios assessment.
Dollar Tree, Inc. (DLTR) presents a more challenging income profile, with a negative net margin of -17.24% and deteriorating earnings over the period. Financial ratios reveal negative ROE (-76.2%) and a high debt burden (net debt to EBITDA 3.26). Despite a very favorable rating on some scores, its overall rating is D+ with a slightly unfavorable global ratios view.
For investors, Target’s slightly favorable rating and value-creation moat with declining profitability might appeal to those seeking stable quality and moderate growth. Conversely, Dollar Tree’s very favorable moat status with improving ROIC but poor income and financial ratios could be interpreted as a higher risk, potentially fitting risk-tolerant profiles seeking turnaround opportunities.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Target Corporation and Dollar Tree, Inc. to enhance your investment decisions:
