DLTR, Dollar Tree, Inc.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- Revenue is Consumable (49%), Variety (46%) and Seasonal (6%).
- What moves the needle
- Sales per store and how fast inventory moves. What decides it: same-store sales, inventory turns, and whether thin margins survive a price war.
- Is it a good business?
- Return on capital has run in the teens (median 14%, above 15% in 4 of 10 years), though buybacks and expensed R&D and brands shrink the capital base, so the figure overstates the underlying economics. The steadier read is owner earnings: roughly 4% of revenue reaches owners as cash, consistently, and customers and suppliers fund the business through negative working capital. Returns like these are solid but short of clear franchise economics; whether they hold is what the 10-K settles, not the multiple.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →Revenue spreads across 3 lines, the largest Consumable at 49%.
- Consumable49%$9.4B
- Variety46%$8.9B
- Seasonal6%$1.1B
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2017–2026
realized figures from each filing, no estimates| 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | 2026’26 | TTMTTMMay 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $20.7B | $22.2B | $22.8B | $23.6B | $25.5B | $26.3B | $15.4B | $16.8B | $17.6B | $19.4B | $19.7B |
| Gross marginGross mgn | 31% | 32% | 30% | 30% | 31% | 29% | 37% | 36% | 36% | 36% | 37% |
| Operating marginOp. mgn | 8.2% | 9.0% | −4.1% | 5.3% | 7.4% | 6.9% | 13.6% | 10.6% | 8.3% | 8.5% | 8.8% |
| Net incomeNet inc. | $896M | $1.7B | ($1.6B) | $827M | $1.3B | $1.3B | $1.6B | ($998M) | ($3.0B) | $1.3B | $1.3B |
| EPS (diluted)EPS | $3.78 | $7.21 | $-6.69 | $3.47 | $5.65 | $5.80 | $7.21 | $-4.54 | $-14.03 | $6.22 | $6.52 |
| Owner earningsOwner earn. | $1.1B | $878M | $949M | $835M | $1.8B | $410M | $976M | $1.5B | — | — | $1.9B |
| Owner earnings marginOE mgn | 5.4% | 3.9% | 4.2% | 3.5% | 7.1% | 1.6% | 6.3% | 8.9% | — | — | 9.7% |
| ROICROIC | 11% | 17% | -8% | 10% | 16% | 15% | 14% | 14% | 19% | 23% | 24% |
| Cash & investmentsCash+inv | $870M | $1.1B | $422M | $539M | $1.4B | $985M | $643M | $425M | $1.3B | $718M | $1.0B |
| Net debt / (cash)Net debt | $5.5B | $4.6B | $3.8B | $3.2B | $1.8B | $2.4B | $2.8B | $3.0B | $2.2B | $1.7B | $1.9B |
Owner’s Scorecard
Will it survive?
- No meaningful interest burdenLittle or no interest expense reported
Little or no interest expense reported, the business isn't leaning on lenders to operate.
- ConservativeTotal debt $2.4B ÷ operating income $1.7B
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $1.7BModest net debtCash $718M − debt $2.4B
Netting $718M of cash and short-term investments against $2.4B of debt leaves $1.7B owed, about 1.0× a year's operating profit, versus the gross figure above. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Negative, funded by othersDSO 2 + DIO 0 − DPO 45 days
Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”), the company grows on other people's money. (Little or no inventory, a services / asset-light model, so the inventory leg is ~0.)
Is it a good business?
- HighNOPAT $1.3B ÷ invested capital $5.5B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- SolidOwner Earnings $1.6B = operating cash $2.7B − capex $1.1B
What an owner could take out without starving the business. That's 8% of revenue. Treating stock comp as the real expense it is (less $59M of SBC) leaves $1.5B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $2.7B ÷ net income $1.3B
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns most of itDividends + buybacks $1.5B ÷ Owner Earnings $1.6B
Of $1.6B Owner Earnings, $1.5B (100%) went back to shareholders, $0 dividends, $1.5B buybacks. Net of $59M stock comp, the real buyback was about $1.5B. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 1.75×ExpandingCapex $1.1B ÷ depreciation $648M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2017–2026
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 7 of 10
Lost money in 3 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 4 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 8% (FY2017) → 9% (FY2026)
Margins held roughly steady across the record.
- Reinvestment, incremental ROIC returns capital
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
- Owner earnings growth +2%/yr
Free cash to owners grew about 2% a year over the record.
- Worst year 2019 · −4.1% op. margin
Operations went underwater in 2019, understand why before trusting the good years.
- Share count −1.5%/yr
The share count is shrinking, buybacks are quietly growing your slice of the business.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2017–2024
Over the record, the business generated $15.3B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a deleverager, a meaningful share of cash went to paying down debt.
- Reinvested$6.8B · 45%
- Buybacks$2.7B · 18%
- Retained (debt / cash)$5.8B · 38%
It reinvested $6.8B (45%) back into the business and returned $2.7B (18%) to owners, $0 in dividends, $2.7B in buybacks. Total debt fell $3.4B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
read the proxy →Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- CEO pay ratio911:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio isn't proof of anything, some businesses are genuinely top-heavy in scarce skill, but a runaway figure is where Buffett starts asking whether the board is doing its job or just keeping the chair company.
- Stock-based compensation$59M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 4% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
1 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $19.4B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 1.07×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $2.4B vs $218M WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability MissA profit every year (10-yr record) · 3 loss years
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · none paid
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −369%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $6.22/share and book value $18.20/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Dollar Tree, Inc. has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $1.9B on 197M diluted shares; net debt $1.9B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2026
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Pricing power & competitionBusiness
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“The labor market for these executives and other key personnel is nationwide in scope and intensely competitive.”
From the recordOperating margin8.8% now (TTM), off a 13.6% peak (FY2023) - Supplier & input dependenceMD&A
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“We rely on a limited number of suppliers for certain consumable merchandise, including frozen and refrigerated products.”
From the recordGross-margin cushion (TTM)37% - Concentrated dependenceMD&A
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Our ability to drive traffic and increase sales in our existing stores is critical to our success and is dependent on a variety of factors, including merchandise quality, assortment, price, relevance and availability, marketing efforts, store operations and customer satisfaction.”
From the recordOwner-earnings margin at stake (TTM)10% - Debt terms & refinancingRisk Factors
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“Our lease agreements do not contain any material residual value guarantees or material restrictive financial covenants.”
From the recordBalance sheet (TTM)$1.7B modest net debt · no real interest burden - Litigation & contingenciesBusiness
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“These laws permit regulators to assess potentially significant fines for data privacy violations and may create a right for individuals to bring class action suits seeking damages for violations.”
A judgment, not a number, weigh it against the filing yourself. - Regulation & policyMD&A
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Further, there is no guarantee that we will be able to successfully mitigate the impact of tariffs through one or more of the foregoing strategies or that our customers will respond favorably to the implementation of these strategies.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2026 vs FY2025
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “If we are unable to accurately predict the products that our customers will demand, implement competitive and effective pricing and marketing strategies, or timely and appropriately respond to changing demographics, consumer needs, preferences or spending patterns, then the demand for our products (…”
- “During our 2025 Investor Day held on October 15, 2025, we outlined our operational strategy for the years ahead, including an expanded, more relevant assortment, agile cost management, a more connected customer experience in stores, new store growth, and improved store conditions and operations, sup…”
- “While the company has taken action to preserve its rights, there remains substantial uncertainty regarding the impacts of this decision on the availability, timing, and amount of potential refunds, if any, for the invalidated tariffs, the scope and duration of newly announced tariffs, and the possib…”
- “We are actively implementing mitigation strategies to offset the impact of cost pressures and inflation, including tariffs, by re-negotiating supplier terms, re-engineering products for efficiency, shifting country of origin where it adds advantage, discontinuing lower-margin or underperforming item…”
- “Fiscal 2024 Other (income) expense, net $ (61.9) $ (29.1) $ 0.1 112.7 % Fiscal 2025 compared to Fiscal 2024 Other income, net increased $32.8 million in fiscal 2025 compared to the prior year, primarily due to a higher insurance gain recognized in fiscal 2025 for the excess of the insurance proceeds…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Discount & variety retail
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| WMTWalmart Inc. | $706.4B | 24% | 4.2% | 18% | 2% |
| COSTCostco Wholesale Corp. | $275.2B | 13% | 3.8% | 37% | 3% |
| TGTTarget Corp. | $104.8B | 28% | 4.9% | 16% | 3% |
| DGDollar General Corp | $42.7B | 31% | 5.2% | 14% | 6% |
| DLTRDollar Tree, Inc. | $19.4B | 36% | 8.5% | 23% | 8% |