Dollar General Hits 52-Week High


Dollar General Corporation’s (DG) shares reached a new 52-week high of $61.32 yesterday. However, the stock of this discount retailer closed at $60.74, reflecting a year-to-date return of roughly 41.5%. The shares moved north primarily backed by momentum from the company’s recently reported better-than-expected third-quarter fiscal 2013 results and an impressive full-year outlook.

Dollar General currently trades at a forward P/E of 18.9x, in line with the peer group average. The last traded price is 3.8% below the Zacks Consensus average analyst price target of $63.14. Average volume of shares traded over the last 3 months stands at approximately 2,802.1K.

Growth Drivers

Investors are optimistic about this stock as its third-quarter earnings per share of 72 cents beat the Zacks Consensus Estimate and increased 14.3% year over year. Dollar General reported net sales of $4,381.8 million, up 10.5% on a year-over-year basis driven by robust consumable sales.

Sales of the consumables category continue to improve, primarily buoyed by the sturdy sales of tobacco products, perishables, candy and snacks. Comps also remained strong across seasonal and home products, backed by higher traffic.

Looking ahead, Dollar General expects to maintain its ongoing growth momentum for fiscal 2013. This is evident from its fiscal 2013 earnings projection in the range of $3.18 to $3.22 per share, indicating an increase in the lower end of the previously provided guidance of $3.15 to $3.22. The Zacks Consensus Earnings Estimate for fiscal 2013 currently stands at $3.21, which is towards the higher end of the company’s forecast. Moreover, it expects sales to escalate by 10%-10.5% year on year.

This Tennessee-based retailer, operating through nearly 11,061 stores, currently holds a Zacks Rank #3 (Hold).

Apart from Dolar General, other retail stocks such as Newell Rubbermaid Inc. (NWL), Whirlpool Corp. (WHR) and Copa Holdings SA (CPA) achieved new 52-week highs of $32.25, $155.05 and $157.00, respectively, on Dec 10, 2013.

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