Will Dollar General Meet Consensus Estimates for 4Q15?



Highlights of Dollar General’s 3Q15 earnings

  • Dollar General’s (DG) total net sales grew by 7.3% to $5.1 billion on a year-over-year basis, which included 2.3% growth in comparable store sales.
  • The company’s gross profit expanded by 19 basis points from 3Q14 to 30.3% of the total net sales.
  • The SG&A (selling, general, and administration) expense increased by 18 basis points from 3Q14 to 22% of total net sales.
  • The adjusted net income came in at $257 million, a 7.6% growth over 3Q14.
  • The adjusted EPS increased by 11% to $0.87, driven by margin expansion and share repurchase of 3.8 million shares over the period.

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Guidance for fiscal 2015

Dollar General (DG) updated its guidance for fiscal 2015. It narrowed its range for its adjusted EPS for fiscal 2015 from $3.85 to $3.95 to a range of $3.88 to $3.93. The 4Q15 adjusted EPS is projected to be in the range of $1.23 to $1.28, which would be an ~8% increase from 4Q14. Wall Street expects the company to achieve its guidance, as the consensus is $1.26 for 4Q15.

Dollar General expects net sales for fiscal 2015 to increase by 8.0% and same-store sales to be in the range of 2.5% to 2.8%. Wall Street expects sales to increase by 7.2% to $5.29 billion.

Investors who want to invest in Dollar General (DG) and other US consumer discretionary stocks can invest in ETF’s like the SPDR S&P Retail ETF (XRT) or the Consumer Discretionary Select Sector SPDR ETF (XLY), which has exposure to other US discount retailers like Dollar Tree (DLTR), Walmart (WMT), and Costco (COST).

In the next article, we will look at the consensus analyst recommendations for the stock.


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