Dollarama vs Dollar Tree Which Is More Favorable?

Dollarama and Dollar Tree are both well-known discount retail chains that cater to budget-conscious consumers. While Dollarama focuses on offering a wide variety of products at higher price points, Dollar Tree maintains its commitment to selling everything for just one dollar. Both companies have experienced significant growth in recent years, but their stocks have performed differently. Dollarama has seen steady increases in its stock price, while Dollar Tree has faced challenges due to competition and rising costs. Investors must carefully compare the two stocks to make informed decisions.

Dollarama or Dollar Tree?

When comparing Dollarama and Dollar Tree, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Dollarama and Dollar Tree.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Dollarama has a dividend yield of 0.19%, while Dollar Tree has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Dollarama reports a 5-year dividend growth of -4.10% year and a payout ratio of 7.87%. On the other hand, Dollar Tree reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Dollarama P/E ratio at 37.98 and Dollar Tree's P/E ratio at -12.96. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Dollarama P/B ratio is 34.81 while Dollar Tree's P/B ratio is 1.87.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Dollarama has seen a 5-year revenue growth of 0.81%, while Dollar Tree's is 0.45%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Dollarama's ROE at 187.36% and Dollar Tree's ROE at -13.74%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $104.50 for Dollarama and $64.09 for Dollar Tree. Over the past year, Dollarama's prices ranged from $67.34 to $109.74, with a yearly change of 62.96%. Dollar Tree's prices fluctuated between $60.49 and $151.22, with a yearly change of 149.99%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.