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Dollar General (DG) Laps the Stock Market: Here's Why

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Dollar General (DG - Free Report) ended the recent trading session at $122.99, demonstrating a +1.37% swing from the preceding day's closing price. The stock exceeded the S&P 500, which registered a gain of 0.16% for the day. Elsewhere, the Dow saw an upswing of 0.47%, while the tech-heavy Nasdaq appreciated by 0.07%.

The discount retailer's shares have seen an increase of 3.41% over the last month, not keeping up with the Retail-Wholesale sector's gain of 7.39% and the S&P 500's gain of 4.02%.

Analysts and investors alike will be keeping a close eye on the performance of Dollar General in its upcoming earnings disclosure. The company's earnings report is set to go public on December 7, 2023. It is anticipated that the company will report an EPS of $1.25, marking a 46.35% fall compared to the same quarter of the previous year. Alongside, our most recent consensus estimate is anticipating revenue of $9.69 billion, indicating a 2.36% upward movement from the same quarter last year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $7.56 per share and revenue of $38.69 billion, which would represent changes of -29.21% and +2.24%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for Dollar General. These revisions typically reflect the latest short-term business trends, which can change frequently. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.06% higher. Dollar General presently features a Zacks Rank of #5 (Strong Sell).

Looking at its valuation, Dollar General is holding a Forward P/E ratio of 16.04. This valuation marks a discount compared to its industry's average Forward P/E of 23.24.

We can additionally observe that DG currently boasts a PEG ratio of 2.22. 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. The Retail - Discount Stores industry had an average PEG ratio of 2.22 as trading concluded yesterday.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. At present, this industry carries a Zacks Industry Rank of 155, placing it within the bottom 39% of over 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.

To follow DG in the coming trading sessions, be sure to utilize Zacks.com.


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