In May 2019, Dollar General Corporation (NYSE:DG) released its earnings update. Generally, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by 5.6% next year compared with the higher past 5-year average growth rate of 11%. Currently with trailing-twelve-month earnings of US$1.6b, we can expect this to reach US$1.7b by 2020. Below is a brief commentary on the longer term outlook the market has for Dollar General. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How is Dollar General going to perform in the near future?
The view from 27 analysts over the next three years is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 7.0% based on the most recent earnings level of US$1.6b to the final forecast of US$1.9b by 2022. EPS reaches $8.08 in the final year of forecast compared to the current $5.99 EPS today. Margins are currently sitting at 6.2%, approximately the same as previous years. With analysts forecasting revenue growth of 0.22426 and DG's net income growth expected to roughly track that, this company may add value for shareholders over time.
Future outlook is only one aspect when you're building an investment case for a stock. For Dollar General, I've compiled three fundamental aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Dollar General worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Dollar General is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Dollar General? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.