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Dollar General Corporation

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Although shares of Dollar General have risen and outpaced the industry in the past three months, they may derail in the near future. In spite of reporting decent third-quarter fiscal 2018 results, management trimmed fiscal 2018 earnings view citing "greater-than-anticipated expenses" related to hurricanes and higher transportation costs. Moreover, any deleverage in SG&A rate might impact margins. Also, increasing threat from online retailers on parameters such as pricing cannot be ignored. Not to forget, a cut in SNAP benefit may also weigh on the performance. Nevertheless, better pricing, private label offering, effective inventory management, and merchandise and operational initiatives bode well. These along with a compelling store growth story at convenient locations and focus on consumable products provides an edge. Contribution from new outlets and comparable-store sales growth favorably impacted the top line.

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