Preview: What to Expect From Dollar General’s Earnings on Thursday
Dollar General, the US’ largest discount retailer by the number of stores, is expected to report earnings per share of $2.00 in the fiscal third quarter, which represents a year-over-year decline of over 13% from $2.31 per share seen in the same period a year ago.
However, the company’s revenue would also rise about 4% to $8.5 billion. In the last two years, the company has delivered an earnings surprise most of the time.
According to ZACKS Research, in fiscal 2021, Dollar General expects net sales to increase by 0.5% to 1.5% and same-store sales to decline by 2.5-3.5%. Earnings are now projected to be between $9.60 and $10.20 per share.
According to the company’s earlier predictions, fiscal 2021 net sales will be down 1% to up 1% and same-store sales will decline by 3-5%. Earnings were earlier expected to range between $9.50 and $10.20 per share.
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 $247.75 with a high forecast of $260.00 and a low forecast of $218.00.
The average price target represents a 10.88% change from the last price of $223.43. From those nine analysts, eight rated “Buy”, one rated “Sell” while none rated “Hold”, according to Tipranks.
Morgan Stanley gave the base target price of $245 with a high of $320 under a bull scenario and $165 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.
Technical analysis suggests it is good to buy as 100-day Moving Average, and 100-200-day MACD Oscillator signals a strong buying opportunity.
“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) and similar to the market multiple. This seems unwarranted given DG’s consistent execution & outlook.”
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