Dollar Tree's stock price has held up well over the past year, as other retailers have been hammered. Trading in the low $20s at the end of 2007, it has fluctuated in a trading range from the mid-$30s to the low $40s, with recent prices near the higher end of that range.
TheStreet.com Ratings' evaluation model quantitatively analyzes a company's valuation metrics, current financial situation and consensus expectations of future earnings growth. A broad range of fundamental and technical data is condensed into a single risk-adjusted composite mark. Grades for most companies range from A-plus to E-minus, with bankrupt firms assigned marks of F.
A "performance rating" grade for a stock is determined from analyzes of past performance and prospects for future returns. The model processes trends in sales, net income, projected earnings--based on analyst consensus estimates--and economic factors. Credit is given for stocks with low valuations, as measured by price/earnings ratios, price to sales and price to book, based on current stock prices.
A "risk rating" grade is determined primarily on the level of volatility of a stock's daily and monthly returns and by the company's financial stability, as well as economic factors.
Rarely will a stock have both a very high "performance rating" grade, and an unusually high "risk rating" grade. There is always a tradeoff between risk and reward, so stocks awarded the highest "overall ratings" grades from the Street.com Ratings are those that provide an optimal combination of performance and risk attributes.
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