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Dollar General (DG) on Fire: What is Driving the Stock?
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Shares of Dollar General Corporation (DG - Free Report) have gained nearly 12% in the past one month buoyed by back-to-back positive earnings surprise and operational initiatives. Currently, the stock is hovering near its 52-week high of $92, which was attained on Jun 3, 2016.
On May 26, 2016, Dollar General came up with fifth straight quarter of positive earnings surprise, as it reported first-quarter fiscal 2016 results. The company posted quarterly earnings of $1.03 per share that beat the Zacks Consensus Estimate of $0.94, and surged 22.6% from the year-ago period buoyed by higher sales and share repurchase activity.
We believe that the company’s commitment toward better price management, cost containment, private label offering, effective inventory management, merchandise and operational initiatives should drive sales and margin trends. Moreover, Dollar General is focusing on consumables as well as discretionary categories along with items between $1 and $5, to increase traffic. The rollout of tobacco has been a key factor in driving up traffic.
Further, the company is expanding its cooler facilities to enhance the sale of perishable items, and is also rolling out DG digital coupon program. Sales at the consumables division continued to improve in the first quarter of fiscal 2016. Dollar General’s model indicates earnings per share annual growth target of 10–15% and net sales increase of 7–10%.
The Zacks Rank #3 (Hold) company has also displayed impressive comparable-store sales growth. In fact, fiscal 2015 represented the 26th consecutive year of comparable-store sales growth. A consistent increase in traffic and average transaction value led to 2.2%, 2.3%, 2.8% and 3.7% growth in comps in the fourth, third, second and first quarters of fiscal 2015, respectively. During the first quarter of fiscal 2016, comparable-store sales inched up 2.2%. Management now projects comparable-store sales growth of 2–4% in the long run.
However, Dollar General posted lower-than-expected sales in the last eleven quarters. In the recently concluded quarter, the company generated sales of $5,265.4 million, also below the Zacks Consensus Estimate of $5,281 million.
Stocks to Consider
Some better-ranked stocks worth considering in the retail sector include Burlington Stores, Inc. (BURL - Free Report) , Fred's, Inc. and Perry Ellis International Inc. . All these stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Dollar General (DG) on Fire: What is Driving the Stock?
Shares of Dollar General Corporation (DG - Free Report) have gained nearly 12% in the past one month buoyed by back-to-back positive earnings surprise and operational initiatives. Currently, the stock is hovering near its 52-week high of $92, which was attained on Jun 3, 2016.
On May 26, 2016, Dollar General came up with fifth straight quarter of positive earnings surprise, as it reported first-quarter fiscal 2016 results. The company posted quarterly earnings of $1.03 per share that beat the Zacks Consensus Estimate of $0.94, and surged 22.6% from the year-ago period buoyed by higher sales and share repurchase activity.
We believe that the company’s commitment toward better price management, cost containment, private label offering, effective inventory management, merchandise and operational initiatives should drive sales and margin trends. Moreover, Dollar General is focusing on consumables as well as discretionary categories along with items between $1 and $5, to increase traffic. The rollout of tobacco has been a key factor in driving up traffic.
Further, the company is expanding its cooler facilities to enhance the sale of perishable items, and is also rolling out DG digital coupon program. Sales at the consumables division continued to improve in the first quarter of fiscal 2016. Dollar General’s model indicates earnings per share annual growth target of 10–15% and net sales increase of 7–10%.
DOLLAR GENERAL Price and Consensus
DOLLAR GENERAL Price and Consensus | DOLLAR GENERAL Quote
The Zacks Rank #3 (Hold) company has also displayed impressive comparable-store sales growth. In fact, fiscal 2015 represented the 26th consecutive year of comparable-store sales growth. A consistent increase in traffic and average transaction value led to 2.2%, 2.3%, 2.8% and 3.7% growth in comps in the fourth, third, second and first quarters of fiscal 2015, respectively. During the first quarter of fiscal 2016, comparable-store sales inched up 2.2%. Management now projects comparable-store sales growth of 2–4% in the long run.
However, Dollar General posted lower-than-expected sales in the last eleven quarters. In the recently concluded quarter, the company generated sales of $5,265.4 million, also below the Zacks Consensus Estimate of $5,281 million.
Stocks to Consider
Some better-ranked stocks worth considering in the retail sector include Burlington Stores, Inc. (BURL - Free Report) , Fred's, Inc. and Perry Ellis International Inc. . All these stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>