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Should You Buy Dollarama After Earnings?

Dollar store retailers experienced a renaissance following the 2007-2008 financial crisis. The Great Recession broadened dollar store consumers beyond a niche demographic. That has been great news for Dollarama (TSX:DOL), the top dollar store retailer in Canada.

This Montreal-based dollar store retailer released its fourth quarter and full-year fiscal 2023 results on March 29. In Q4 FY2023, the company delivered sales growth of 20% to $1.47 billion. Meanwhile, comparable store sales increased 15% compared to the previous year. Dollarama opened 24 net new stores in the quarter, while diluted net earnings per share jumped 23% to $0.91.

For the full year, Dollarama achieved total sales growth of 16% to $5.05 billion. Moreover, comparable store sales grew 12% over fiscal 2022. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. Dollarama delivered EBITDA growth of 18% year-over-year to $1.52 billion for the full year. Meanwhile, operating income increased 21% to $1.19 billion.

Overall, it was a strong year for Dollarama in a year that saw soaring inflation rates. However, Dollarama succeeded on the back of transaction increases as it drew in more consumers hoping to avoid high prices. Indeed, average transaction size decreased 2.2% compared to the previous year. Looking ahead to fiscal 2024, Dollarama expects to continue to deliver positive growth on the back of strong demand.

Shares of this top TSX stock possess a solid price-to-earnings ratio of 29 at the time of this writing. Moreover, it offers a quarterly dividend of $0.071 per share. That represents a very modest 0.3% yield.