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Dollar General (DG - Free Report) , a current Zacks Rank #5 (Strong Sell), is a discount retailer in the United States offering a wide selection of merchandise, consumable items, seasonal items, home products, and apparel.
Analysts have taken a bearish stance on the company’s earnings outlook, with expectations decreasing across all timeframes over the last several months.
Image Source: Zacks Investment Research
What’s going on with Dollar General? Let’s take a closer look.
Dollar General
Dollar General shares have suffered in 2023, cut in half and widely underperforming relative to the general market. As shown below, the company’s latest two sets of quarterly results soured the opinions of investors, seeing notable selling pressure post-earnings.
Image Source: Zacks Investment Research
Nonetheless, shares are up 17% since their October low, perhaps reflecting a turn-around in current sentiment among market participants. Still, waiting until positive earnings estimate revisions roll in will be worthwhile, which would fully support positive price action.
The reasoning behind DG’s poor share performance is primarily centered around crunched profitability and weaker revenue growth trends relative to prior periods. In fact, Same-store sales decreased 0.1% year-over-year in its latest quarterly release, with a decline in customer traffic as the primary driving factor.
In addition, the company’s gross profit margin declined from 32.3% to 31.1%, with operating profit also decreasing 25% from the year-ago period. The unfavorable results caused DG to trim its current year (FY23) outlook, now expecting net sales growth in a band of 1.3% - 3.3% compared to 3.5% - 5.0% previously.
Despite the current unfavorable outlook, the company’s shareholder-friendly nature certainly shouldn’t be overlooked. Dollar General has boosted its dividend payout five times over the last five years, translating to a 17% five-year annualized dividend growth rate.
Shares are currently yielding 2.0% annually.
Image Source: Zacks Investment Research
Keep an eye out for the company’s upcoming quarterly release on December 7th, as the Zacks Consensus EPS Estimate of $1.23 has been taken 46% lower since the end of August and reflects a decrease of 47% from the same period last year.
Image Source: Zacks Investment Research
Bottom Line
Negative earnings estimate revisions from analysts and crunched profitability paint a challenging picture for the company’s shares in the near term.
Dollar General (DG - Free Report) is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.
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Bear of the Day: Dollar General (DG)
Dollar General (DG - Free Report) , a current Zacks Rank #5 (Strong Sell), is a discount retailer in the United States offering a wide selection of merchandise, consumable items, seasonal items, home products, and apparel.
Analysts have taken a bearish stance on the company’s earnings outlook, with expectations decreasing across all timeframes over the last several months.
Image Source: Zacks Investment Research
What’s going on with Dollar General? Let’s take a closer look.
Dollar General
Dollar General shares have suffered in 2023, cut in half and widely underperforming relative to the general market. As shown below, the company’s latest two sets of quarterly results soured the opinions of investors, seeing notable selling pressure post-earnings.
Image Source: Zacks Investment Research
Nonetheless, shares are up 17% since their October low, perhaps reflecting a turn-around in current sentiment among market participants. Still, waiting until positive earnings estimate revisions roll in will be worthwhile, which would fully support positive price action.
The reasoning behind DG’s poor share performance is primarily centered around crunched profitability and weaker revenue growth trends relative to prior periods. In fact, Same-store sales decreased 0.1% year-over-year in its latest quarterly release, with a decline in customer traffic as the primary driving factor.
In addition, the company’s gross profit margin declined from 32.3% to 31.1%, with operating profit also decreasing 25% from the year-ago period. The unfavorable results caused DG to trim its current year (FY23) outlook, now expecting net sales growth in a band of 1.3% - 3.3% compared to 3.5% - 5.0% previously.
Despite the current unfavorable outlook, the company’s shareholder-friendly nature certainly shouldn’t be overlooked. Dollar General has boosted its dividend payout five times over the last five years, translating to a 17% five-year annualized dividend growth rate.
Shares are currently yielding 2.0% annually.
Image Source: Zacks Investment Research
Keep an eye out for the company’s upcoming quarterly release on December 7th, as the Zacks Consensus EPS Estimate of $1.23 has been taken 46% lower since the end of August and reflects a decrease of 47% from the same period last year.
Image Source: Zacks Investment Research
Bottom Line
Negative earnings estimate revisions from analysts and crunched profitability paint a challenging picture for the company’s shares in the near term.
Dollar General (DG - Free Report) is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.
For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.