Home Stocks Can Dollar General Corp. (DG) Gain Momentum?

Can Dollar General Corp. (DG) Gain Momentum?

By Carly Forster 

Dollar General Corp. (DG) is a Goodlettsville, Tennessee based American variety store chain that operates over 10,000 locations in 40 U.S. states. The retailer offers both name brand and generic products on an assortment of merchandise. Dollar General Corp. (NYSE:DG) released its first quarter earnings report on June 3 and its results just missed analysts’ expectations.

During their Q1 results, Dollar General Corp. (NYSE:DG) reported $0.72 earnings per share, missing analysts’ consensus estimate of $0.73 by $0.01. During the same quarter last year, the company posted $0.71 earnings per share. The retailer reported a profit of $4.25 billion for the quarter, compared to analysts’ consensus of $4.56 billion. Dollar General’s proceeds for the quarter were up 6.8% on year-over-year basis. The company updated its FY15 guidance to $3.45-3.55 earnings per share.

The retailer believes bad weather conditions and higher competition affected sales for most of the quarter, however sales have been getting stronger as of recent. Dollar General Corp. (NYSE:DG) CEO Rick Dreiling noted, “Even as these factors weighed on our sales results, we saw trends improve as we moved through the quarter.”

Shares of Dollar General Corp. (NYSE:DG) opened at $56.43 on Wednesday, June 3. The retailer has a 1-year high of $62.93 and a 1-year low of $49.47. The stocks daily moving average is $56.22 and has a 50-day moving average of $55.73. The market cap for the retailer is $17.76 billion and its P/E ratio is 17.56.

On June 4, RBC Capital analyst Scott Ciccarelli gave the stock a “sector perform”, but raised his price objective from $62 to $63. Ciccarelly currently has a 10.8% average return on all stocks and a 63% success rate, according to TipRanks.

On May 28, Deutsche Bank analyst Paul Trussell downgraded his rating from BUY to HOLD and lowered his price target from $65 to $60. He explained, “DG remains one of the best managed companies in retail with a long track record of success; however, heading into 1Q we are concerned that the stock may be unable to outperform this year as numerous headwinds impact results.” Trussell has a +6.9% average return on all stocks and a 69% success rate.

On the other hand, on June 2, Goldman Sachs analyst Stephen Grambling reiterated a conviction BUY rating for the retailer with a price target of $72. He reasoned, “While the stock has come under pressure on competitor downgrades, weaker 1Q results across retail, and headwinds facing low-income consumers, we remain constructive on Dollar General Corp. (NYSE:DG)’s prospects looking forward.” Grambling has a -3.0% average return on all stocks and a 52% success rate.

Dollar General (DG) currently has an analyst consensus of HOLD

Carly Forster writes about stock market news. She can be reached at [email protected]