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Dollar General (DG) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Dollar General (DG) closed the most recent trading day at $135.80, moving -1.57% from the previous trading session. This change lagged the S&P 500's 0.16% loss on the day. Meanwhile, the Dow gained 0.11%, and the Nasdaq, a tech-heavy index, lost 0.44%.

Prior to today's trading, shares of the discount retailer had gained 1.11% over the past month. This has lagged the Retail-Wholesale sector's gain of 4.42% and the S&P 500's gain of 4% in that time.

Investors will be hoping for strength from DG as it approaches its next earnings release. On that day, DG is projected to report earnings of $1.58 per share, which would represent year-over-year growth of 3.95%. Our most recent consensus estimate is calling for quarterly revenue of $6.89 billion, up 6.87% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.47 per share and revenue of $27.52 billion, which would represent changes of +8.38% and +7.38%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for DG. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.07% higher within the past month. DG currently has a Zacks Rank of #2 (Buy).

Digging into valuation, DG currently has a Forward P/E ratio of 21.33. For comparison, its industry has an average Forward P/E of 21.33, which means DG is trading at a no noticeable deviation to the group.

Investors should also note that DG has a PEG ratio of 1.95 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Discount Stores industry currently had an average PEG ratio of 2 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 44, which puts it in the top 18% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow DG in the coming trading sessions, be sure to utilize Zacks.com.

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