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Dollar General (DG) Gains But Lags Market: What You Should Know

Zacks Equity Research

Dollar General (DG) closed at $135.38 in the latest trading session, marking a +0.34% move from the prior day. The stock lagged the S&P 500's daily gain of 1.5%. At the same time, the Dow added 1.48%, and the tech-heavy Nasdaq gained 1.95%.

Prior to today's trading, shares of the discount retailer had lost 5.12% over the past month. This has was narrower than the Retail-Wholesale sector's loss of 6.26% and lagged the S&P 500's loss of 4.19% in that time.

DG will be looking to display strength as it nears 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%. Meanwhile, our latest consensus estimate is calling for revenue of $6.89 billion, up 6.87% from the prior-year quarter.

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.

It is also important to note the recent changes to analyst estimates for DG. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. DG is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that DG has a Forward P/E ratio of 20.86 right now. This valuation marks a no noticeable deviation compared to its industry's average Forward P/E of 20.86.

Investors should also note that DG has a PEG ratio of 1.91 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Discount Stores industry currently had an average PEG ratio of 1.86 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 67, putting it in the top 27% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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