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Dollar General (DG) Gains As Market Dips: What You Should Know

Zacks Equity Research
·3 min read

Dollar General (DG) closed at $213.71 in the latest trading session, marking a +0.79% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.3%. Meanwhile, the Dow lost 0.8%, and the Nasdaq, a tech-heavy index, added 0.64%.

Coming into today, shares of the discount retailer had gained 1.07% in the past month. In that same time, the Retail-Wholesale sector gained 5.08%, while the S&P 500 gained 3.25%.

Investors will be hoping for strength from DG as it approaches its next earnings release. The company is expected to report EPS of $1.95, up 37.32% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8 billion, up 14.39% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $10.16 per share and revenue of $32.92 billion. These totals would mark changes of +50.97% and +18.63%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for DG. These revisions help to show the ever-changing nature of near-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.

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 2.95% higher. DG currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, DG is holding a Forward P/E ratio of 20.88. This represents a discount compared to its industry's average Forward P/E of 22.

We can also see that DG currently has a PEG ratio of 1.88. 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. Retail - Discount Stores stocks are, on average, holding a PEG ratio of 3.05 based on yesterday's closing prices.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 124, which puts it in the top 50% 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.

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


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Zacks Investment Research