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Dollar General (DG) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research
·3 mins read

In the latest trading session, Dollar General (DG) closed at $192.89, marking a +1.31% move from the previous day. This move outpaced the S&P 500's daily gain of 0.72%. Elsewhere, the Dow gained 0.89%, while the tech-heavy Nasdaq added 1.47%.

Prior to today's trading, shares of the discount retailer had gained 0.49% over the past month. This has lagged the Retail-Wholesale sector's gain of 10.77% and the S&P 500's gain of 5.85% 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 $1.74 per share. This would mark no growth from the year-ago period. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $8.15 billion, up 16.72% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.88 per share and revenue of $31.95 billion, which would represent changes of +31.95% and +15.11%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for DG. These recent revisions tend to reflect the evolving nature of short-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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.36% higher within the past month. DG currently has a Zacks Rank of #2 (Buy).

Digging into valuation, DG currently has a Forward P/E ratio of 21.44. Its industry sports an average Forward P/E of 25.4, so we one might conclude that DG is trading at a discount comparatively.

Also, we should mention that DG has a PEG ratio of 1.72. 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 was holding an average PEG ratio of 4.2 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 185, which puts it in the bottom 28% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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