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Will Dollar General (DG) Beat Earnings?

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We expect Dollar General Corporation (DG - Free Report) , a discount retailer, to beat expectations when it reports second-quarter fiscal 2013 results on Sep 4, 2013.

Why a Likely Positive Surprise?

Our proven model shows that Dollar General is likely to beat earnings because it has the right combination of two key components.       

Positive Zacks ESP: Dollar General currently has an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +1.35%. This is because the Most Accurate Estimate stands at 75 cents, while the Zacks Consensus Estimate is pegged at 74 cents.               

Zacks Rank #2 (Buy): Note that stocks with a Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings estimates. The sell-rated stocks (Zacks Rank #4 and #5) should never be considered going into an earnings announcement.

The combination of Dollar General’s Zacks Rank #2 (Buy) and +1.35% ESP makes us very confident regarding a positive earnings beat on Sep 4.

What is Driving the Better-than-Expected Earnings?     

Dollar General’s merchandising initiatives, including addition of private-label brands; remodeling endeavors; expansion of the selling area; and share buyback program make us confident on the stock outperformance in the second quarter. The positive trend is seen in the trailing four-quarter average surprise of 4.8%.

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

The Buckle, Inc. (BKE - Free Report) , Earnings ESP of +2.20% and a Zacks Rank #2 (Buy).

Zumiez, Inc. , Earnings ESP of +5.88% and a Zacks Rank #3 (Hold).

Dollar Tree, Inc. (DLTR - Free Report) , Earnings ESP of +1.70% and a Zacks Rank #3 (Hold).

In-Depth Zacks Research for the Tickers Above

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Dollar Tree, Inc. (DLTR) - free report >>

Dollar General Corporation (DG) - free report >>

Buckle, Inc. (The) (BKE) - free report >>

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