Dollarama (TSE:DOL): A Hidden Gem for EPS Growth Seekers

As an investor, you're always on the lookout for companies that can deliver consistent earnings per share (EPS) growth. One such opportunity presents itself in the form of Dollarama (TSE:DOL), a Canadian discount retailer that has been quietly crushing it in the market. Let's dive into the reasons why Dollarama's EPS growth is a compelling reason to consider this stock for your portfolio.



Robust EPS Growth

Dollarama has demonstrated impressive EPS growth over the past five years, with an annual growth rate of 16.2%. This is significantly higher than the industry average of 12.5% and the peer average of 10.5%. In the second quarter of fiscal 2025, Dollarama reported an EPS of $1.02, a substantial increase from the same quarter last year. This strong EPS growth is driven by two primary factors: improved gross margin and strategic expansion in Latin America.

Improved Gross Margin

Dollarama has successfully managed its costs, leading to an improved gross margin. In the second quarter of fiscal 2025, the gross margin increased to 45.2% compared to 43.9% in the same quarter last year. This improvement reflects the company's effective cost management strategies, which have contributed to its EPS growth.

Strategic Expansion in Latin America

Dollarama's expansion into Latin America, particularly with the Dollarcity stores, has contributed to its EPS growth. The company opened 23 new stores during the second quarter of fiscal 2025, demonstrating its commitment to growth in this region. This expansion not only increases revenue but also diversifies Dollarama's market presence, further enhancing its EPS growth potential.

Sustainability of EPS Growth

While Dollarama's EPS growth is impressive, several challenges may impact its sustainability in the long term. These include high valuation, increased operating costs, cautious consumer spending, intense competition, and adverse weather conditions. To maintain its market position and drive future growth, Dollarama must navigate these risks carefully.



In conclusion, Dollarama's EPS growth is a compelling reason to consider this stock for your portfolio. With a strong track record of growth, effective cost management, and strategic expansion, Dollarama presents an opportunity for investors seeking companies with robust EPS growth. However, it is essential to be aware of the potential challenges and risks that may impact the sustainability of this growth in the long term. As an investor, it is crucial to stay informed and make well-researched decisions based on the most up-to-date information available.