Preview: Dollar General Q2 Earnings to Decline 17%

Dollar General, the US’ largest discount retailer by the number of stores, is expected to report a profit of $2.59 in the second quarter, which represents a year-over-year decline of about 17% from $3.12 per share seen in the same period a year ago.

The company’s revenue would also decline 1.5% to 8.56 billion. On average, the company has delivered an earnings surprise of over 9% in the last four consecutive quarters.

Analysts expect earnings per share of $10.18 for the fiscal year, versus $10.62 last year. Revenue is expected to come in at $34.10 billion, compared with $33.75 billion last year.

Dollar General shares have gained over 10% so far this year. The stock ended 0.80% lower at $232.75 on Tuesday.

Analyst Comments

“Dollar General (DG) is a best-in-class operator offering a rare combination of 1) consistent, high-quality top-and bottom-line results; 2) visible store growth; and 3) a shareholder-friendly capital allocation policy. Recent high-quality results add more confidence to the 10% L-T EPS growth algorithm, ramping top-line initiatives appear sustainable, and we see underappreciated margin upside from the rollout of Fresh self-distribution,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“DG’s valuation (high teens P/E multiple) presents a solid entry point as it is in line with its history despite much stronger EPS power (and below DG’s pre-COVID multiple) while a ~5x turn discount to the market. This seems unwarranted given DG’s consistent execution & outlook.”

Dollar General Stock Price Forecast

Nine analysts who offered stock ratings for Dollar General in the last three months forecast the average price in 12 months of $245.78 with a high forecast of $270.00 and a low forecast of $209.00.

The average price target represents a 5.60% change from the last price of $232.75. From those nine analysts, eight rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $225 with a high of $300 under a bull scenario and $150 under the worst-case scenario. The firm gave an “Overweight” rating on the discount retailer’s stock.

Several other analysts have also updated their stock outlook. Telsey Advisory Group raised the target price to $260 from $235. Deutsche Bank lifted the price target to $253 from $231. Oppenheimer upped the target price to $270 from $225.

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