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

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In the latest trading session, Dollar General (DG) closed at $244.45, marking a +1.27% move from the previous day. The stock lagged the S&P 500's daily gain of 2.62%. At the same time, the Dow added 1.37%, and the tech-heavy Nasdaq gained 0.25%.

Heading into today, shares of the discount retailer had lost 0.9% over the past month, outpacing the Retail-Wholesale sector's loss of 1.49% and lagging the S&P 500's gain of 0.24% in that time.

Investors will be hoping for strength from Dollar General as it approaches its next earnings release. On that day, Dollar General is projected to report earnings of $2.90 per share, which would represent year-over-year growth of 7.81%. Our most recent consensus estimate is calling for quarterly revenue of $9.35 billion, up 8.12% from the year-ago period.

DG's full-year Zacks Consensus Estimates are calling for earnings of $11.49 per share and revenue of $37.59 billion. These results would represent year-over-year changes of +12.98% and +9.84%, respectively.

Investors should also note any recent changes to analyst estimates for Dollar General. Recent revisions tend to reflect the latest 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.13% higher. Dollar General currently has a Zacks Rank of #2 (Buy).

Investors should also note Dollar General's current valuation metrics, including its Forward P/E ratio of 21.01. Its industry sports an average Forward P/E of 19.37, so we one might conclude that Dollar General is trading at a premium comparatively.

Also, we should mention that DG has a PEG ratio of 1.73. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DG's industry had an average PEG ratio of 1.73 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 210, which puts it in the bottom 17% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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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