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Dollar General (DG) Dips More Than Broader Markets: What You Should Know

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Dollar General (DG - Free Report) closed the most recent trading day at $157, moving -0.54% from the previous trading session. This move lagged the S&P 500's daily loss of 0.2%. At the same time, the Dow added 0.04%, and the tech-heavy Nasdaq lost 0.13%.

Heading into today, shares of the discount retailer had lost 1.66% over the past month, lagging the Retail-Wholesale sector's gain of 6.5% and the S&P 500's gain of 7.08% in that time.

DG will be looking to display strength as it nears its next earnings release, which is expected to be December 5, 2019. The company is expected to report EPS of $1.38, up 9.52% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $6.91 billion, up 7.74% from the prior-year quarter.

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 +7.93%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for DG. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. Within the past 30 days, our consensus EPS projection has moved 0.01% higher. DG is currently a Zacks Rank #2 (Buy).

Digging into valuation, DG currently has a Forward P/E ratio of 23.87. This valuation marks a premium compared to its industry's average Forward P/E of 23.29.

Investors should also note that DG has a PEG ratio of 2.34 right now. 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 2.36 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 51, putting it in the top 20% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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