Dollar Tree Inc. (DLTR - Free Report) is slated to report fourth-quarter fiscal 2016 results on Mar 1. The big question facing investors is, whether this discount-store chain will be able to deliver a positive earnings surprise in the quarter to be reported.

Last quarter, the company posted a positive earnings surprise of 2.5%. Further, it has surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 2.4%.

A look at Dollar Tree’s earnings estimates revisions shows that the Zacks Consensus Estimate for the fourth quarter and fiscal 2016 has remained stable for over 30 days. A comparison with the year-ago period reported earnings reveals that the Zacks Consensus Estimate of $1.33 per share for the fourth quarter reflects growth of 31.5% from the prior-year quarter. Analysts polled by Zacks expect revenues of $5.64 billion for the fourth quarter, reflecting a 5.1% growth from the year-ago quarter. Let’s see how things are shaping up for this announcement.

Dollar Tree, Inc. Price and EPS Surprise

Dollar Tree, Inc. Price and EPS Surprise | Dollar Tree, Inc. Quote

Factors Influencing This Quarter

Dollar Tree is progressing well with its growth initiatives, which include store expansion strategies, enhancing store productivity, tapping new markets and incorporating innovative sales channels. Further, the company remains on track with the integration of Family Dollar, which is expected to generate annual run rate synergies of at least $300 million by the end of the third year of the acquisition.

Additionally, Dollar Tree is concentrating on expanding store base, alongside incorporating technological advancements. The company leverages an extensive network of stores to effectively penetrate targeted markets, which in turn enables it to generate healthy sales and gain market share.

Dollar Tree has displayed remarkable comparable-store sales (comps) performance as it recorded its 35th straight quarter of comps growth in third-quarter fiscal 2016. Comps remained robust mainly due to competitive pricing and strategic store expansion plans, including remodeling and relocations. Going forward, management anticipates comps to increase in a low-single digit range in fiscal 2016.

While the incorporation of Family Dollar is expected to generate synergies in the long run, the increased costs and cannibalization will likely continue affecting results throughout the integration and re-banner process. Further, foreign currency headwinds remain a concern.

Moreover, Dollar Tree has underperformed the broader industry in the last six months. The stock has declined 7.2% in the past six months, compared with the Zacks categorized Retail–Discount & Variety industry's growth of 1.8% in the same period.

Given these mixed factors, it’s better to wait and see if Dollar Tree can deliver an earnings beat this time around.

Earnings Whispers

Our proven model does not conclusively show that Dollar Tree is likely to beat earnings this quarter. This is because a stock needs to have both a positive 

 and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: 

Dollar Tree currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.33. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: 

Dollar Tree’s Zacks Rank #2 (Buy) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Best Buy Co. Inc. (BBY - Free Report) , scheduled to report earnings on Mar 1, currently has an Earnings ESP of +1.81% and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Costco Wholesale Corp. (COST - Free Report) , slated to report earnings on Mar 2, currently has an Earnings ESP of +0.74% and a Zacks Rank #3.

Staples Inc. (SPLS - Free Report), expected to release earnings on Mar 3, has an Earnings ESP of +4.00% and a Zacks Rank #3.