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

Zacks Equity Research

Dollar General (DG) closed at $162.64 in the latest trading session, marking a +0.28% move from the prior day. This change lagged the S&P 500's 0.56% gain on the day. Meanwhile, the Dow gained 0.49%, and the Nasdaq, a tech-heavy index, added 1.01%.

Heading into today, shares of the discount retailer had gained 1.68% over the past month, outpacing the Retail-Wholesale sector's gain of 0.67% and the S&P 500's gain of 1.38% in that time.

Wall Street will be looking for positivity from DG as it approaches its next earnings report date. In that report, analysts expect DG to post earnings of $1.38 per share. This would mark year-over-year growth of 9.52%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.91 billion, up 7.73% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.61 per share and revenue of $27.66 billion, which would represent changes of +10.72% and +7.92%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for DG. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.2% higher. DG is currently a Zacks Rank #2 (Buy).

Digging into valuation, DG currently has a Forward P/E ratio of 24.53. This valuation marks a premium compared to its industry's average Forward P/E of 23.62.

Investors should also note that DG has a PEG ratio of 2.54 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. DG's industry had an average PEG ratio of 2.42 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 80, putting it in the top 32% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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