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Dollar General (DG) Gains But Lags Market: What You Should Know

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Dollar General (DG - Free Report) closed the most recent trading day at $162.25, moving +1.08% from the previous trading session. The stock lagged the S&P 500's daily gain of 1.09%. Elsewhere, the Dow gained 1.21%, while the tech-heavy Nasdaq added 1.34%.

Heading into today, shares of the discount retailer had gained 2.18% over the past month, outpacing the Retail-Wholesale sector's loss of 3.08% and the S&P 500's loss of 1.17% in that time.

DG will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.38, up 9.52% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $6.91 billion, up 7.73% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.61 per share and revenue of $27.66 billion. These totals would mark changes of +10.72% and +7.92%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for DG. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.21% higher within the past month. DG is holding a Zacks Rank of #2 (Buy) right now.

Investors should also note DG's current valuation metrics, including its Forward P/E ratio of 24.28. This represents a premium compared to its industry's average Forward P/E of 23.43.

We can also see that DG currently has a PEG ratio of 2.52. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DG's industry had an average PEG ratio of 2.44 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 14, which puts it in the top 6% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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