Dollar General (DG) Q1 Earnings In Focus: What's In Store?

Dollar General (NYSE:DG) , one of the largest discount retailers, is slated to report first-quarter fiscal 2016 results on May 26. The big question facing investors now is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the preceding quarter, Dollar General outperformed the Zacks Consensus Estimate by 2.4%. In the trailing four quarters, it beat the Zacks Consensus Estimate by an average of 1.8%. Let’s see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Dollar General is likely to beat earnings estimates this fiscal quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Dollar General has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 95 cents. The company carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, its ESP of 0.00% makes surprise prediction difficult.

Factors Influencing this Quarter

We believe Dollar General’s commitment to better price management, merchandise, cost containment and operational initiatives will favor results in the quarter to be reported. However, the company’s lower-than-expected sales in the last 10 quarters remain a matter of concern. Moreover, analysts expect margins to be pressurized by higher sales of lower margin carrying consumables.

DOLLAR GENERAL Price, Consensus and EPS Surprise

DOLLAR GENERAL Price, Consensus and EPS Surprise | DOLLAR GENERAL Quote

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

TiVo Inc. (NASDAQ:TIVO) has an Earnings ESP of +25.00% and a Zacks Rank #1 (Strong Buy).

Best Buy Co., Inc. (NYSE:BBY) has an Earnings ESP of +2.86% and a Zacks Rank #2 (Buy).

DSW Inc. (NYSE:DSW) has an Earnings ESP of +2.17% and a Zacks Rank #3.