Goodlettsville, Tennessee-based Dollar General Corporation (DG) is a discount retailer that provides various merchandise products. Valued at a market cap of $16.1 billion, the company offers a wide selection of merchandise, consumable items, seasonal items, home products, and apparel. It is expected to announce its fiscal Q4 earnings results on Thursday, Mar. 13.
Prior to this event, analysts expect the discount store company to report a profit of $1.50 per share, down 18% from $1.83 per share in the year-ago quarter. The company has topped Wall Street's bottom-line estimates in two of the last four quarters while missing on other two occasions. Its earnings of $0.89 per share in the previous quarter fell short of the consensus estimates by 7.3%.
For fiscal 2024, analysts expect DG to report an EPS of $5.75, down 23.8% from a profit of $7.55 per share in fiscal 2023. Nonetheless, EPS is expected to rebound in fiscal 2025 and grow by 4% year-over-year to $5.98.
Shares of Dollar General have fallen 45.5% over the past 52 weeks, significantly underperforming both the S&P 500 Index's ($SPX) 24.1% rise and the Consumer Staples Select Sector SPDR Fund’s (XLP) 8.4% return over the same time frame.
Decreased consumer spending, along with intensified competition from major retailers, as well as margin pressures, have hurt the company over the past year. On Dec. 5, DG released its Q3 earnings results and shares of DG remained fairly stable. Despite operating in a challenging environment, the company’s revenue increased 5% year-over-year to $10.2 billion, marginally surpassed the Wall Street estimates, and delivered same-store sales near the upper range of its expectations.
The 1.3% annual growth in same-store sales was primarily fueled by the consumables category. However, this was offset by its earnings, which decreased 29.4% year-over-year to $0.89 and fell short of the estimates by 7.3%. Both the gross and operating margins contracted and impacted DG’s profitability.
Wall Street analysts are moderately optimistic about Dollar General’s stock, with a "Moderate Buy" rating overall. Among 28 analysts covering the stock, 10 recommend "Strong Buy," one suggests a “Moderate Buy,” 16 recommend “Hold,” and one indicates a “Strong Sell” rating.
The mean price target for DG is $90.37, which indicates a 24.3% potential upside from the current levels.
