Dollarama Inc: A Stock on the Rise, But at What Cost?
Dollarama Inc, the Canadian online marketplace, has been making waves on the Toronto Stock Exchange, with its stock price soaring to new heights. But beneath the surface, a growing concern is emerging: has Dollarama become too expensive to ignore?
Some analysts are sounding the alarm, warning that the company’s rapid growth may be unsustainable. But a recent price target increase by RBC to $212 CAD suggests that the bulls are still firmly in control. The question is, for how long?
The Numbers Don’t Lie
The company is set to release its quarterly earnings on August 27, and analysts are expecting a 13.73% increase in earnings per share compared to the previous year. That’s a significant jump, and one that could further fuel the stock’s upward momentum.
But what about the revenue? Analysts are expecting a 8.15% increase from the previous year, with the expected revenue for the quarter coming in at around $1.69 billion CAD. That’s a respectable number, but one that may not be enough to justify the stock’s current valuation.
The Risks Are Real
So, what are the risks that investors should be aware of? For one, the company’s rapid growth may be unsustainable in the long term. If Dollarama’s sales growth slows down, the stock price could take a hit.
Additionally, the company’s reliance on online sales may make it vulnerable to changes in consumer behavior. If consumers start to shift away from online shopping, Dollarama’s sales could suffer.
The Verdict
In conclusion, Dollarama Inc is a stock that is worth watching. While the growth prospects are still positive, investors should be aware of the risks that come with investing in a rapidly growing company.
Here are the key takeaways:
- Expected earnings per share increase: 13.73%
- Expected revenue for the quarter: $1.69 billion CAD
- Price target increase by RBC: $212 CAD
- Risks: unsustainable growth, reliance on online sales
Investors would do well to keep a close eye on Dollarama’s quarterly earnings release on August 27. The numbers will tell the story, and investors will have to decide whether the risks are worth the potential rewards.