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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 the most recent trading day at $210.56, moving +0.03% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.14%. Meanwhile, the Dow gained 0.9%, and the Nasdaq, a tech-heavy index, lost 1.37%.

Prior to today's trading, shares of the discount retailer had lost 4.57% over the past month. This has lagged the Retail-Wholesale sector's loss of 1.79% and the S&P 500's gain of 2.25% in that time.

Investors will be hoping for strength from DG as it approaches its next earnings release. The company is expected to report EPS of $1.97, up 38.73% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $8 billion, up 14.39% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $10.16 per share and revenue of $32.92 billion, which would represent changes of +50.97% and +18.63%, respectively, from the prior 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. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 1.52% higher. DG is currently a Zacks Rank #2 (Buy).

Investors should also note DG's current valuation metrics, including its Forward P/E ratio of 20.73. Its industry sports an average Forward P/E of 21.58, so we one might conclude that DG is trading at a discount comparatively.

Meanwhile, DG's PEG ratio is currently 1.87. 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. The Retail - Discount Stores industry currently had an average PEG ratio of 2.99 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 18% 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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Zacks Investment Research