Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Dollar General Stock is a Retail Star and a Buy After Target's Earnings

By Zacks Investment ResearchStock MarketsNov 20, 2020 07:17AM ET
Dollar General Stock is a Retail Star and a Buy After Target's Earnings
By Zacks Investment Research   |  Nov 20, 2020 07:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Dollar General DG has outpaced its larger rivals Target TGT and Walmart (NYSE:WMT) WMT in 2020, but it has lagged both the discount retailers in the past three months. Luckily, Target’s recent Q3 results showcased that big retailers are still cruising along during the pandemic. And Dollar General will get its chance to remind Wall Street about its growth and potential when it reports its third quarter financial results on December 3.

Relatively Unique in Retail…

Dollar General isn’t necessarily a direct rival to Walmart, Target, or Costco COST even though they are all often categorized as discount retailers. DG operates nearly 17,000 smaller format stores across most of the U.S., often in more rural and working-class areas. Meanwhile, Target has around 1,900 stores and Walmart has roughly 5,000 in the U.S

DG sells everything from food to motor oil for “everyday low prices,” unlike rival Dollar Tree’s DLTR $1 for everything pitch. And it is not controversial to say that it is much more of a true discount store than Walmart and Target.

Investors should pay close attention to the fact that Dollar General has succeeded in the e-commerce age by expanding its brick and mortar footprint in areas where Amazon AMZN boxes aren’t the norm. This could be vital to its continued growth and expansion for years to come. But Dollar General is, of course, adapting with the times, even though it hasn’t gone all-in on delivery.

Dollar General has improved its digital ecosystem and it’s rolling out offerings like order online and pick up in store. Something that is also likely to resonate with its customers is its relatively new app that allows consumers to scan items as they shop to make sure they stay on budget and help find digital coupons. And in select stores, customers “can pay-in-app and skip the checkout line.”

Other Fundamentals…

DG stock has blown away TGT, WMT, and Dollar Tree (NASDAQ:DLTR) over the past five years, up roughly 230%. Dollar General has kept up its outperformance in 2020 as well, up 35% vs. TGT’s 33%.

But as we mentioned at the top, Dollar General has cooled off a bit, down over 3% in the last month. The stock closed regular trading Thursday at $211.21 a share, which puts it about 6% off its mid-October records. This could give it room to climb as Wall Street just pushed Target stock up to new highs for its ability to continue big growth during the coronavirus.

Despite its outperformance, DG trades at a discount in terms of forward 12-month earnings compared to its industry’s 34.7X and Target’s 21.8X at 21.1X. Meanwhile, the company’s 0.68% dividend yield comes in not too far below the 10-year U.S. Treasury’s average. And in a sign of strength amid broader economic uncertainty, DG resumed its share repurchase plan during the second quarter.

Last quarter, DG’s revenue jumped over 24% and same-store sales popped 19%, while its operating profit surged 81% to $1 billion. Peeking ahead, Zacks estimates call for Dollar General’s Q3 sales to jump over 14% to $8 billion to hep lift its adjusted earnings by 39%.

DG’s overall fiscal 2020 sales are projected to jump 19% to come in at roughly $33 billion, with its adjusted EPS expected to soar over 50%. This would represent its strongest growth since 2012’s 14% revenue climb.

Bottom Line

Dollar General easily beat our earnings estimates in the last two periods and its strong bottom-line revisions help it grab a Zacks Rank #2 (Buy) right now. DG also sports “B” grades for Growth and Momentum in our Style Scores system and its industry sits in the top 30%, as we enter the thick of the holiday shopping season.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer (NYSE:SAM) Company which shot up +143.0% in a little more than 9 months and Nvidia (NASDAQ:NVDA) which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Target Corporation (NYSE:TGT): Free Stock Analysis Report, Inc. (NASDAQ:AMZN): Free Stock Analysis Report

Walmart Inc. (WMT): Free Stock Analysis Report

Dollar Tree, Inc. (DLTR): Free Stock Analysis Report

Dollar General Corporation (NYSE:DG): Free Stock Analysis Report

Costco Wholesale Corporation (NASDAQ:COST): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research
Dollar General Stock is a Retail Star and a Buy After Target's Earnings

Related Articles

Dollar General Stock is a Retail Star and a Buy After Target's Earnings

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email