Dollar General Corporation (DG) recently announced that it has completed $200 million share buybacks, indicating its commitment toward utilizing cash flow to enhance stakeholders’ return.
This discount store operator has bought back approximately $220 million worth of shares year to date. Since the inception of the share repurchase program in Dec 2011, the company has repurchased 23.6 million shares for about $1.1 billion, and has approximately $424 million left under the current authorization.
The company stated that a strong balance sheet and healthy cash flow generation poise it well to enhance shareholders’ value through share repurchases. During the last reported quarter the company bought back 0.4 million shares for $20 million.
Earlier this month, Dollar General posted lower-than-expected first-quarter 2013 results and consequently clipped its fiscal 2013 outlook. The company posted adjusted quarterly earnings of 71 cents a share that jumped 13% year over year but missed the Zacks Consensus Estimate by a penny.
The company expects adverse sales mix and macro headwinds to continue to deter its financials. Consequently, the company lowered the upper guidance range of its previous forecast.
This Zacks Rank #3 (Hold) company now expects fiscal 2013 earnings to be in the range of $3.15 – $3.22 per share compared with its earlier guidance range of $3.15 – $3.30.
Total sales are expected to rise by 10% to 11% year over year, while same-store sales are expected to increase by 4% to 5%. Gross margin is expected to decline compared with the prior year, while adjusted operating profit is expected to be in the range of $1.73 billion – $1.77 billion.
Other Stocks to Consider
Until any further upgrade in Dollar General’s Zacks Rank, other well performing stocks in the retail, wholesale sector include Big 5 Sporting Goods Corp. (BGFV), which carries a Zacks Rank #1 (Strong Buy). The Gap, Inc. (GPS) and Cabela's Incorporated (CAB), carrying a Zacks Rank #2 (Buy) are also worth considering.
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