Retail

What to Look for in Dollar General Earnings

Dollar General
courtesy of Dollar General Corp.
Dollar General Corp. (NYSE: DG) is set to report its fiscal second-quarter earnings before the markets open on Thursday. This company is continuing to receive praise from analysts and investors alike as it has had a solid performance in 2016 thus far. Going into this earnings report we might expect solid results to push the stock even higher, potentially to new highs.

Keep in mind that Dollar General is one of 24/7 Wall St.’s 10 stocks to own for the decade.

The Thomson Reuters consensus estimates are $1.09 in earnings per share (EPS) on $5.5 billion in revenue for the quarter. In the same period of the previous year, the retailer posted EPS of $0.95 and $5.1 billion in revenue.

This company is effectively all U.S.-based. After all, it has no stores named Euro-General. It is now reaching up and taking business from Wal-Mart, and a stronger dollar helps it buy more goods on the cheap that it can sell in the sub-$10 retail category.

At Dollar General’s analyst day earlier this year, analysts offered up increasingly positive calls, which have been reflected in the stock price over the summer and even over the year thus far. At that time, Merrill Lynch upgraded Dollar General to a Buy rating from Neutral with a $100 price target. This upgrade is based on the many achievable comp, margin and capital return/cash flow initiatives in place.

A few other analysts weighed in on Dollar General prior to the earnings report:

  • Jefferies has a Hold rating with a $96 price target.
  • Deutsche Bank has a Hold rating and a $99 price target.
  • Morgan Stanley has an Overweight rating with a $102 price target.
  • JPMorgan has a Buy rating.
  • Citigroup reiterated a Buy rating with a $107 price target.
  • BTIG Research has a Buy rating and a $105 price target.
  • Credit Suisse reiterated a Buy rating.
  • Telsey Advisory Group reiterated a Buy rating.

Excluding Wednesday’s move, Dollar General has outperformed the broad markets with the stock up 28% year to date. Over the past 52 weeks, the stock is up about 24%.

Shares of Dollar General were trading up 0.5% at $91.93 Wednesday morning, with a consensus analyst price target of $99.71 and a 52-week trading range of $59.75 to $96.88.

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