Dollarama Inc.

The business

Operates ~1,600+ value/discount stores across Canada with a fixed, low price-point model on consumables and general merchandise.

Owns a majority interest in Dollarcity (Latin America) and acquired Australia's The Reject Shop in 2025, adding international growth and consolidated revenue.

Vertically managed direct sourcing keeps costs low and gross margin near 45%.

The moat

Scale-driven purchasing power and direct global sourcing that smaller discounters cannot match.

National store density and brand trust as the default Canadian dollar-store, with pricing power via multi-price-point architecture.

Consumer trade-down tailwind: value retail gains share when household budgets tighten.

Financial snapshot

Most recent reported period : Q1 fiscal 2027 (reported June 2026); fiscal 2026 ended Feb 1, 2026. Figures reflect the review date — confirm current numbers before acting.

Free cash flow yield & sustainable growth

Free cash flow yield : ≈2.9%TTM operating cash flow C$1.83B − capex ~C$0.32B = ~C$1.51B free cash flow ÷ ~C$51.5B market cap ≈ 2.9%.

Double-digit revenue growth from new-store openings, resilient same-store sales, and consolidation of The Reject Shop and Dollarcity.

Roughly C$1.5B of trailing free cash flow funds an aggressive share-buyback program (a bigger capital-return lever than the tiny dividend).

Low capex intensity relative to cash generation leaves ample reinvestment and buyback capacity.

See the full free-cash-flow yield ranking →

Valuation & what to watch

Simple FCF yield ~2.9% — a premium/growth multiple, not a value name.

P/E ~39x (forward ~37x), reflecting consistent double-digit growth and best-in-class returns on capital.

Investors are paying up for compounding and international optionality rather than current cash yield.

Dividend

~C$0.48/share annually, ~0.25% yield — a token payout; capital is returned primarily through large ongoing share buybacks rather than dividends.

Risks & the bear case

• Rich valuation leaves little margin for a growth or margin disappointment.
• A reversal in the consumer trade-down cycle (stronger economy) could slow same-store sales.
• Import cost inflation, FX and potential tariffs pressure the fixed-price model's margins.
• International execution risk in Latin America and the newly acquired Australian business.

Recent developments

Q1 fiscal 2027 delivered 21.4% total sales growth and 5.6% Canadian comps with gross margin near 45%; guidance held.

The Reject Shop (Australia) acquisition consolidated into results, lifting reported revenue growth into the mid-teens.

Verdict

Dollarama is arguably the highest-quality retailer on the TSX — durable double-digit growth, ~45% gross margins and ~C$1.5B of free cash flow recycled into buybacks. The trade-off is price: at ~2.9% FCF yield and ~39x earnings, the market already credits years of compounding plus international expansion, so the risk is multiple compression on any stumble. CoinCompass is a publisher, not an investment adviser — do your own due diligence.