Back to top

Image: Bigstock

Dollar General (DG) Queued for Q1 Earnings: Factors to Note

Read MoreHide Full Article

Dollar General Corporation (DG - Free Report) is likely to register a decline in the top line when it reports first-quarter fiscal 2021 results on May 27, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $8,153 million, indicating a decline of 3.5% from the prior-year quarter.

Further, the bottom line of this discount retailer is expected to decrease year over year. Although the Zacks Consensus Estimate for earnings for the quarter under review has increased by a penny to $2.12 over the past 30 days, it still suggests a decline from $2.56 reported in the year-ago period.

The company has a trailing four-quarter earnings surprise of 22.8%, on average. In the last reported quarter, this Goodlettsville, TN-based company missed the Zacks Consensus Estimate by 3.3%.

Key Factors to Note

Quite apparently, Dollar General is likely to have faced tough year-over-year comparisons in sales, as COVID-19 benefits are lapped. Industry experts believe that lower at-home consumption activities and a drop in pantry-loading trends might have hurt the company’s top-line performance. Management had also cautioned that there remains significant uncertainty related to the severity and duration of the ongoing pandemic, and its impact on the economy, consumer behavior and the business.

On its fourth-quarter earnings call management informed that from Jan 30, 2021 through Feb 26, 2021, same-store sales rose approximately 5.7% year over year, despite roughly 8,400 lost store operating days as a result of closures due to winter weather. However, it further stated that from Feb 27, 2021 through Mar 16, 2021, same-store sales declined about 16%.

Dollar General also expected operating profit to take a hit of approximately $35-$40 million in the first quarter due to the loss of sales from storage closures and expenses related to the widespread winter weather in February.

In spite of aforementioned headwinds, Dollar General’s efficient pricing strategy, private label offerings and effective inventory management bode well. In order to boost traffic, the company has been focusing on both consumables and non-consumables categories. The company has also been offering “better-for-you” products at affordable prices. Additionally, it has been expanding cooler facilities to enhance the sale of perishable items. Moreover, initiatives such as DG Pickup and DG GO! mobile checkout aimed at providing convenient and contactless shopping experience are noteworthy.

 

Dollar General Corporation Price, Consensus and EPS Surprise

Dollar General Corporation Price, Consensus and EPS Surprise

Dollar General Corporation price-consensus-eps-surprise-chart | Dollar General Corporation Quote

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Dollar General this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dollar General has a Zacks Rank #3 and an Earnings ESP of +2.66%.

3 More Stocks With Favorable Combination

Here are three other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

Best Buy (BBY - Free Report) has an Earnings ESP of +5.10% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco (COST - Free Report) has an Earnings ESP of +2.75% and a Zacks Rank #3.

Ulta Beauty (ULTA - Free Report) has an Earnings ESP of +10.22% and a Zacks Rank #3.

+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities

In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.

Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.

Click here to download this report FREE >>