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

Zacks Equity Research

In the latest trading session, Dollar General (DG) closed at $159.98, marking a -0.1% move from the previous day. This move lagged the S&P 500's daily gain of 0.05%. Elsewhere, the Dow gained 0.11%, while the tech-heavy Nasdaq added 0.11%.

Prior to today's trading, shares of the discount retailer had lost 1.68% over the past month. This has lagged the Retail-Wholesale sector's gain of 1.18% and the S&P 500's gain of 4.32% in that time.

DG will be looking to display strength as it nears its next earnings release, which is expected to be December 5, 2019. In that report, analysts expect DG to post earnings of $1.38 per share. This would mark year-over-year growth of 9.52%. Meanwhile, our latest consensus estimate is calling for revenue of $6.91 billion, up 7.74% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.61 per share and revenue of $27.66 billion, which would represent changes of +10.72% and +7.93%, respectively, from the prior year.

Investors should also note any 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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 0.01% higher within the past month. DG currently has a Zacks Rank of #2 (Buy).

Looking at its valuation, DG is holding a Forward P/E ratio of 24.22. This represents a premium compared to its industry's average Forward P/E of 23.58.

Investors should also note that DG has a PEG ratio of 2.37 right now. 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. Retail - Discount Stores stocks are, on average, holding a PEG ratio of 2.39 based on yesterday's closing prices.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 34, putting it in the top 14% 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.

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


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