Will Dollar General Miss Estimates Again?
Dollar General Corp. (NYSE: DG) is scheduled to announce its first quarter financial results before the market opens on Tuesday and expectations point towards a year-over-year increase of almost 14 percent in earnings.
According to Estimize, both experts and the crowd anticipate earnings of $0.82 per share on revenue of $4.942 billion and $4.932 billion, respectively. These figures compare to the earnings of $0.72 per share and revenue of $4.522 billion reported in the same quarter last year.
Dollar General’s earnings, like many other retailers, respond to a cycle, where earnings peak on the fourth quarter and then fall, only to recuperate slightly on the second quarter.
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The second thing that should be noticed from the graph above is that the company has tended to miss estimates in recent quarters.
A second chart shows how sentiment has evolved over time. After hitting a high of $0.85 per share on late-February, the Street’s consensus fell to $0.82, where it remained since mid-March.
The 18% Upside Thesis
In a recent report, analysts at Goldman Sachs upgraded Dollar General’s rating from from Buy to Conviction Buy, while boosting their price target from $85.00 to $87.00.
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The company’s growth prospects are fueled by its sturdy fundamentals, consistent high-ROIC business model and an attractive valuation. In fact, the analysts see an 18 percent upside to the 12-month price target.
The experts also addressed some investor worries, like port issues, wage pressures, etc. They stated, "We note DG has significantly lower import exposure versus DLTR, DG sells essentially no produce and limited dairy, and we have already factored wage pressure into our estimates, as we embed less leverage in the out years to incorporate potential wage hikes. "
"Furthermore, our numbers do not factor in potential upside from consolidation in the dollar store industry," the analysts add.
Latest Ratings for DG
May 2015 | Goldman Sachs | Upgrades | Buy | Conviction Buy |
Apr 2015 | Deutsche Bank | Maintains | Buy | |
Mar 2015 | Jefferies | Maintains | Buy |
View More Analyst Ratings for DG
View the Latest Analyst Ratings
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