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Assessing Dollar General (DG) Ahead of Q1 Earnings Release
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Dollar General Corporation (DG - Free Report) is likely to register an increase in the top line when it reports first-quarter fiscal 2024 results on May 30 before the opening bell. The Zacks Consensus Estimate suggests that the company will achieve revenues of $9.87 billion, marking a 5.6% increase compared to the same quarter last year. This anticipated growth implies the discount retailer’s continued efforts to attract budget-conscious consumers.
Despite the expected rise in revenues, Dollar General's bottom line is likely to face challenges. The Zacks Consensus Estimate for earnings per share for the first quarter has remained steady at $1.57 over the past 30 days. This figure indicates a significant decline of 32.9% from earnings reported in the year-ago period.
Historically, Dollar General has had a mixed performance in meeting earnings expectations. Over the trailing four quarters, the company averaged a negative earnings surprise of 1.3%. However, in the most recent quarter, Dollar General exceeded the Zacks Consensus Estimate by 5.2%.
Key Factors to Note
Dollar General's market share growth in both consumable and non-consumable product categories highlights its competitive pricing and value proposition, which continue to resonate with the low-to-middle-income demographic. The company's strategic pricing and promotional efforts, coupled with the ongoing expansion of private brand sales, are anticipated to have favorably impacted the top line.
We remain encouraged by the host of initiatives such as DG Fresh, SKU rationalization, digitization and the expansion of the private fleet that should yield same-store sales improvements. Additionally, the positive impact of the company's "Back to Basics" initiatives, aimed at improving store operations and customer service, is expected to reflect in increased same-store sales. We expect same-store sales growth of 1.7% for the to-be-reported quarter.
However, shrink and markdown-related issues are likely to have put pressure on the gross margin. Also, inflationary pressures on operating costs, including higher wages and logistics expenses, are further compressing margins despite efforts to normalize other expenses. We foresee a gross margin contraction of 140 basis points in the first quarter. Also, we expect SG&A expenses, as a percentage of net sales, to deleverage 110 basis points.
Dollar General Corporation Price, Consensus and EPS Surprise
As investors prepare for Dollar General's first-quarter earnings, the question looms regarding earnings beat or miss. Our proven model does not conclusively predict an earnings beat for Dollar General this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.
Dollar General has a Zacks Rank #3 but an Earnings ESP of -0.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Bath & Body Works (BBWI - Free Report) currently has an Earnings ESP of +5.23% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at 33 cents, flat year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bath & Body Works’ top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.37 billion, which indicates a drop of 2.1% from the figure reported in the prior-year quarter. BBWI has a trailing four-quarter earnings surprise of 23.2%, on average.
Kohl's Corporation (KSS - Free Report) currently has an Earnings ESP of +85.06% and carries a Zacks Rank #3. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at 4 cents, which suggests a sharp decline from the year-ago reported number of 13 cents.
Kohl's top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.54 billion, which indicates a drop of 0.9% from the figure reported in the prior-year quarter. KSS has a trailing four-quarter earnings surprise of 84.2%, on average.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +3.98% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 28 cents suggests a jump of 64.7% from the year-ago quarter.
American Eagle Outfitters’ top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $1.15 billion, which implies an increase of 6.2% from the figure reported in the year-ago quarter. AEO has a trailing four-quarter earnings surprise of 22.7%, on average.
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Assessing Dollar General (DG) Ahead of Q1 Earnings Release
Dollar General Corporation (DG - Free Report) is likely to register an increase in the top line when it reports first-quarter fiscal 2024 results on May 30 before the opening bell. The Zacks Consensus Estimate suggests that the company will achieve revenues of $9.87 billion, marking a 5.6% increase compared to the same quarter last year. This anticipated growth implies the discount retailer’s continued efforts to attract budget-conscious consumers.
Despite the expected rise in revenues, Dollar General's bottom line is likely to face challenges. The Zacks Consensus Estimate for earnings per share for the first quarter has remained steady at $1.57 over the past 30 days. This figure indicates a significant decline of 32.9% from earnings reported in the year-ago period.
Historically, Dollar General has had a mixed performance in meeting earnings expectations. Over the trailing four quarters, the company averaged a negative earnings surprise of 1.3%. However, in the most recent quarter, Dollar General exceeded the Zacks Consensus Estimate by 5.2%.
Key Factors to Note
Dollar General's market share growth in both consumable and non-consumable product categories highlights its competitive pricing and value proposition, which continue to resonate with the low-to-middle-income demographic. The company's strategic pricing and promotional efforts, coupled with the ongoing expansion of private brand sales, are anticipated to have favorably impacted the top line.
We remain encouraged by the host of initiatives such as DG Fresh, SKU rationalization, digitization and the expansion of the private fleet that should yield same-store sales improvements. Additionally, the positive impact of the company's "Back to Basics" initiatives, aimed at improving store operations and customer service, is expected to reflect in increased same-store sales. We expect same-store sales growth of 1.7% for the to-be-reported quarter.
However, shrink and markdown-related issues are likely to have put pressure on the gross margin. Also, inflationary pressures on operating costs, including higher wages and logistics expenses, are further compressing margins despite efforts to normalize other expenses. We foresee a gross margin contraction of 140 basis points in the first quarter. Also, we expect SG&A expenses, as a percentage of net sales, to deleverage 110 basis points.
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
As investors prepare for Dollar General's first-quarter earnings, the question looms regarding earnings beat or miss. Our proven model does not conclusively predict an earnings beat for Dollar General this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.
Dollar General has a Zacks Rank #3 but an Earnings ESP of -0.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Bath & Body Works (BBWI - Free Report) currently has an Earnings ESP of +5.23% and a Zacks Rank of 2. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at 33 cents, flat year over year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Bath & Body Works’ top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.37 billion, which indicates a drop of 2.1% from the figure reported in the prior-year quarter. BBWI has a trailing four-quarter earnings surprise of 23.2%, on average.
Kohl's Corporation (KSS - Free Report) currently has an Earnings ESP of +85.06% and carries a Zacks Rank #3. The Zacks Consensus Estimate for first-quarter fiscal 2024 earnings per share is pegged at 4 cents, which suggests a sharp decline from the year-ago reported number of 13 cents.
Kohl's top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $3.54 billion, which indicates a drop of 0.9% from the figure reported in the prior-year quarter. KSS has a trailing four-quarter earnings surprise of 84.2%, on average.
American Eagle Outfitters (AEO - Free Report) currently has an Earnings ESP of +3.98% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of 28 cents suggests a jump of 64.7% from the year-ago quarter.
American Eagle Outfitters’ top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $1.15 billion, which implies an increase of 6.2% from the figure reported in the year-ago quarter. AEO has a trailing four-quarter earnings surprise of 22.7%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.