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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 $245.35, marking a +0.49% move from the previous day. The stock lagged the S&P 500's daily gain of 2.76%. At the same time, the Dow added 2.43%, and the tech-heavy Nasdaq gained 0.25%.

Heading into today, shares of the discount retailer had gained 5.78% over the past month, lagging the Retail-Wholesale sector's gain of 6.16% and outpacing the S&P 500's gain of 4.44% in that time.

Investors will be hoping for strength from Dollar General as it approaches its next earnings release. In that report, analysts expect Dollar General to post earnings of $2.90 per share. This would mark year-over-year growth of 7.81%. Our most recent consensus estimate is calling for quarterly revenue of $9.35 billion, up 8.1% from the year-ago period.

DG's full-year Zacks Consensus Estimates are calling for earnings of $11.47 per share and revenue of $37.59 billion. These results would represent year-over-year changes of +12.78% and +9.83%, respectively.

Investors might also notice recent changes to analyst estimates for Dollar General. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. Within the past 30 days, our consensus EPS projection remained stagnant. Dollar General is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note Dollar General's current valuation metrics, including its Forward P/E ratio of 21.28. This represents a premium compared to its industry's average Forward P/E of 20.8.

Also, we should mention that DG has a PEG ratio of 1.75. 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 was holding an average PEG ratio of 1.75 at yesterday's closing price.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 200, which puts it in the bottom 21% 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.

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

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