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Investors Reluctant Toward Dollar General (DG): Here's Why
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Shares of Dollar General Corporation (DG - Free Report) have declined 21% in the past six months, underperforming the Zacks categorized Retail-Discount & Variety industry which has witnessed a meager gain of 0.5% in the same time frame. If you are still holding the stock then chances are that you might you might lose more money as prospects of the stock making any significant recovery in the near term seem unlikely.
What’s Hurting the Stock?
Following the Zacks Rank #4 (Sell) company’s lower-than-expected third-quarter fiscal 2016 results on Dec 1, 2016, its shares have declined more than 4%. The company reported negative earnings surprise for the second consecutive quarter. Adjusted earnings of 89 cents per share missed the Zacks Consensus Estimate of 92 cents and decreased 1.1% from the year-ago period. Net sales came in at $5,320 million, an increase of 5% from the prior-year quarter. However, net sales fell short of the Zacks Consensus Estimate of $5,360 million, consequently marking the 13th straight quarter of revenue miss.
Comparable-store sales also declined 0.1% due to deflation in retail food price across perishable items, fall in both Supplemental Nutrition Assistance Program (SNAP) participation rates and benefit levels. Dollar General informed that price deflation and the reduction in SNAP benefits adversely impacted comparable-store sales by about 150 to 175 basis points.
Estimates Going Downhill
Let’s look at the company’s earnings estimate revisions in order to get a clear picture of analysts’ opinion about the stock. We noted that the estimates are going down, which gives an indication that analysts are not convinced about the stock future performance.
In the past 30 days, Dollar General’s earnings estimates for fiscal 2016 and fiscal 2017 declined by 9 cents and 15 cents to $4.40 and $4.73, respectively. On the other hand, earnings estimates for the fourth quarter of fiscal 2016 have declined 3.4% to $1.42, over the same time frame.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Target delivered an average positive earnings surprise of 9.9% in the trailing four quarters and has a long-term earnings growth rate of 9.4%.
Ross Stores delivered an average positive earnings surprise of 5% in the trailing four quarters and has a long-term earnings growth rate of 10.5%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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Investors Reluctant Toward Dollar General (DG): Here's Why
Shares of Dollar General Corporation (DG - Free Report) have declined 21% in the past six months, underperforming the Zacks categorized Retail-Discount & Variety industry which has witnessed a meager gain of 0.5% in the same time frame. If you are still holding the stock then chances are that you might you might lose more money as prospects of the stock making any significant recovery in the near term seem unlikely.
What’s Hurting the Stock?
Following the Zacks Rank #4 (Sell) company’s lower-than-expected third-quarter fiscal 2016 results on Dec 1, 2016, its shares have declined more than 4%. The company reported negative earnings surprise for the second consecutive quarter. Adjusted earnings of 89 cents per share missed the Zacks Consensus Estimate of 92 cents and decreased 1.1% from the year-ago period. Net sales came in at $5,320 million, an increase of 5% from the prior-year quarter. However, net sales fell short of the Zacks Consensus Estimate of $5,360 million, consequently marking the 13th straight quarter of revenue miss.
Comparable-store sales also declined 0.1% due to deflation in retail food price across perishable items, fall in both Supplemental Nutrition Assistance Program (SNAP) participation rates and benefit levels. Dollar General informed that price deflation and the reduction in SNAP benefits adversely impacted comparable-store sales by about 150 to 175 basis points.
Estimates Going Downhill
Let’s look at the company’s earnings estimate revisions in order to get a clear picture of analysts’ opinion about the stock. We noted that the estimates are going down, which gives an indication that analysts are not convinced about the stock future performance.
In the past 30 days, Dollar General’s earnings estimates for fiscal 2016 and fiscal 2017 declined by 9 cents and 15 cents to $4.40 and $4.73, respectively. On the other hand, earnings estimates for the fourth quarter of fiscal 2016 have declined 3.4% to $1.42, over the same time frame.
Stocks to Consider
Better-ranked stocks in the same sector include Burlington Stores, Inc. (BURL - Free Report) flaunting a Zacks Rank #1 (Strong Buy), and Target Corporation (TGT - Free Report) and Ross Stores, Inc. (ROST - Free Report) both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.
Target delivered an average positive earnings surprise of 9.9% in the trailing four quarters and has a long-term earnings growth rate of 9.4%.
Ross Stores delivered an average positive earnings surprise of 5% in the trailing four quarters and has a long-term earnings growth rate of 10.5%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>