Dollar General (DG) Q2 Earnings: What Awaits The Stock?

Dollar General (NYSE:DG) , one of the largest discount retailers, is slated to report second-quarter fiscal 2016 results on Aug 25. The question in investors’ minds now is whether the company will be able to continue with its positive earnings surprise streak in the quarter to be reported. In the preceding quarter, Dollar General outperformed the Zacks Consensus Estimate by 9.6%. In the trailing four quarters, it beat the Zacks Consensus Estimate by an average of 3.5%. 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(Strong Buy), 2 (Buy) or 3 (Hold) 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 $1.09. 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 that Dollar General’s commitment to improve 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 11 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:

Dollar Tree, Inc. (NASDAQ:DLTR) has an Earnings ESP of +4.11% and a Zacks Rank #2.

Best Buy Co., Inc. (NYSE:BBY) has an Earnings ESP of +4.76% and a Zacks Rank #3.

GameStop Corp. (NYSE:GME) has an Earnings ESP of +3.85% and a Zacks Rank #3.