Dollar General Corporation (DG), with a market cap of $25.9 billion, is a leading discount retailer in the United States, specializing in low-priced merchandise across a wide range of categories. Based in Goodlettsville, Tennessee, the company caters to budget-conscious consumers with products spanning consumables, seasonal items, home goods, and apparel.
Shares of this discount retailer have significantly underperformed the broader market over the past 52 weeks. DG has declined 28.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 19.7%. In 2024, shares of DG are down 13.5%, lagging behind SPX's 12.1% YTD returns.
Looking closer, DG has fallen short of the S&P Retail SPDR's (XRT) 10.3% returns over the past 52 weeks.
Dollar General has struggled due to rising inventory shrinkage and markdowns, alongside declining same-store sales and reduced customer traffic. Strategic issues, such as excessive store growth and poor store experience, have also contributed to its underperformance.
Moreover, on May 30, the stock fell 8.1% due to concerns that ongoing consumer price sensitivity would continue to pressure demand for its higher-margin discretionary items, even amid strong Q1 results. The company’s outlook for lower-than-expected sales growth and profit further spooked investors, overshadowing its earlier earnings beat.
For the current fiscal year, ending in January 2025, analysts expect DG's EPS to decline 4.8% year over year to $7.19. The company's earnings surprise history is mixed. It beat the consensus estimates in three of the last four quarters while missing on another occasion.
Among the 27 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 11 “Strong Buy” ratings, three “Moderate Buys,” 12 “Holds,” and one “Moderate Sell.”
This configuration has remained steady over the past months.
On Aug. 12, Corey Tarlowe from Jefferies reaffirmed a “Buy” rating on Dollar General and set a price target of $145. This new target implies a potential upside of 23.3%.
The mean price target of $148.44 represents a premium of 26.2% to DG's current levels. The Street-high price target of 170 implies a potential upside of 44.6%.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
