On April 15, Stewart Glendinning, Dollar Tree’s (NASDAQ:DLTR) chief financial officer dropped approximately $1.24 million of his own cash into shares of DLTR stock. Keep in mind that this wasn’t a performance-based grant or a token gesture — it was real skin in the game.
Sure, executives frequently transact shares of the companies they preside over. However, these suits usually don’t acquire that much unless they truly believe the security is undervalued and due for a move higher. It’s one of the easiest interpretations when it comes to insider transactions. People sell stock for a variety of reasons, including awfully mundane ones, such as tax purposes.
With a buy, there’s only one reason to lock up capital in that manner — the security is anticipated to move higher.
Moreover, what makes the transaction special is Glendinning’s position within the company. As CFO, the executive sees the forward-looking metrics that most outsiders never will (at least not to intimate detail) — we’re talking profit margins, real-time store traffic trends, inventory flow and cost pressures, among others.
If Glendinning’s buying, it’s reasonably safe to assume that he anticipates a turnaround story materializing in hard data.
Speaking of which, let’s not pretend that Dollar Tree represented a bastion of stability in prior cycles. Over the past 52 weeks, DLTR stock hemorrhaged nearly 41% of equity value. That’s a scary decline, even for a risk-tolerant cryptocurrency speculator. But for an executive running the books for one of the most recognizable discount retailers?
That’s high pressure — and yet the $1.24 million doesn’t lie.
Although circumstances for years have looked shaky — to put it diplomatically — Dollar Tree is now in a position of stacking wins. The most obvious anchor weighing the retailer down was Family Dollar. The brand’s inconsistent performance, dated stores and overlapping footprint created a drag on margins while also sapping the leadership team’s focus. Now, with Dollar Tree selling the bulk of the Family Dollar banner for $1 billion, the company has unshackled itself.
But it’s not just divestures that makes DLTR stock compelling amid the insider buy. Fundamentally, Dollar Tree represents one of the few retailers that can actually raise prices. Thanks to President Donald Trump’s tariff plans threatening to push import costs higher — particularly on goods sourced from China — most consumer-facing enterprises are sweating.
As for Dollar Tree, Citi analysts believe that the high-level levies could essentially provide cover for management to boost its prices from the standard $1.25 to $1.50, perhaps even $1.75 — all without triggering major pushback from its core customer base. It’s an evolution, a sign that the brand has moved beyond the rigidly literal definition of a dollar store.
On a related noted, the discount retailer is pushing Dollar Tree Plus, its upgraded store format that offers products priced at higher levels: typically $3, $5 and $7 price tiers. This move would allow the company to step outside the “pure-play” discount arena and grab market share of everyday shoppers simply looking for hidden bargains.
Lastly, DLTR stock is itself a discount. Trading at just 14.7-times earnings and offering a free cash flow yield north of 10%, it’s not getting the love that it arguably deserves. Investors that can look through prior warts and toward the vision may have an intriguing opportunity with Dollar Tree.
