Should You Buy Dollarama Stock Ahead of Earnings?

Dollarama Inc (TSX:DOL) will release its second-quarter results of Fiscal 2021 on September 2. The results are for the period ending August 2.

As a recap, when the dollar store chain released its first-quarter results on June 10, its business looked resilient amid the COVID-19 lockdowns. Even though many of its stores were closed, the company’s top line still grew at a modest 2% year over year.

With many other businesses struggling to avoid significant declines, Dollarama actually generated growth. Comparable store sales were down 2.4% when including those which were shut down temporarily. And excluding the shut down stores, comparable store sales were up 0.7%.

The period ended on May 3 and conditions in the economy have improved since then. And with millions of Canadians still collecting CERB payments during these tough times, it wouldn’t be surprising to see Dollarama have an improved quarter in Q2 as people look to make the most of those benefits payments.

Despite the decent Q1 result, shares of Dollarama would end up declining the days and weeks following the release of the results. Year to date, the stock’s up around 10% and at $49 per share it’s not far from its 52-week high of $52.12.

Even with a good Q2, it’s unlikely Dollarama’s stock will rise a whole lot higher than where it is today. Prior to the pandemic, Dollarama shares struggled to stay above the $50 mark and although the company’s proving to be stable amid COVID-19, investors shouldn’t expect the stock to take off.

If you need a safe place to store your money, Dollarama’s a good option. Just don’t expect the stock to net you a double-digit return this year if you buy it today.