DLMAF - Dollarama: Gross Margin Compression Still An Issue; Shares Fairly Valued
Investment Thesis
Dollarama (DLMAF) [TSX:DOL] re-accelerated its same-store sales growth and delivered double-digit total sales growth in its Q2 F2020. However, the company appears to be sacrificing gross margin for growth in same-store sales and traffics. Looking forward, we anticipate competition to increase as its competitor Canadian Tire (CDNTF) expands its Party City products to its existing locations. Dollarama's shares are currently fairly valued. We believe a pullback will provide a better buying opportunity.
Data by YCharts
Recent Developments: Q2 F2020 Highlights
Dollarama delivered an okay quarter with double-digit top-line and single-digit bottom-line