4Q16 Results Preview: Can Dollar General Beat Estimates?

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4Q16 Results Preview: Can Dollar General Beat Estimates? PART 1 OF 6

What to Expect from Dollar General’s 4Q16 Results

Series snapshot

Dollar General (DG) is slated to release results for the fourth quarter and full fiscal 2016 on Thursday, March 16, 2017. The results relate to the three-month and 12-month periods ending February 3, 2017. Wall Street has predicted EPS (earnings per share) to rise 8.7% YoY (year-over-year) to $1.41 on sales growth of 12.9% during the fourth quarter.

What to Expect from Dollar General&#8217;s 4Q16 Results

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The company posted weaker-than-expected results that missed Wall Street’s expectations for both top and bottom lines during the second and third quarters.

About Dollar General

Headquartered in Tennessee, Dollar General is one of the largest discount retailers in the US. As of August 2016, the company operated about 13,000 stores in 43 US states. Investors looking for exposure to Dollar General through ETFs can consider the VanEck Retail RTF (RTH), which invests 2.5% of its total holdings in the company.

Valuations update and stock recommendations

Dollar General (DG) is currently trading at a one-year forward PE (price-to-earnings) ratio of 16x, operating close to the lower end of its 52-week PE range of 14.3x to 20.3x. The company is trading at a discount to close competitor Dollar Tree (DLTR), which is trading at a one-year forward earnings multiple of 17x.

The company also trades at a small discount to Walmart (WMT), currently valued at 16.4x. Costco (COST) and PriceSmart (PSMT), however, trade at a premium to others in the retail space. The two companies are valued at 27.6x and 26.8x, respectively.

What’s in this series?

In this series, we’ll look at what investors can expect from Dollar General’s 4Q16 results. We’ll provide an update on the company’s year-to-date performance and talk about its expected performance in the next quarter.

We’ll also briefly touch on the company’s current valuation, its stock market performance, and Wall Street recommendations.


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