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Dollar General’s Earnings Likely to Slide This Quarter

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Series snapshot

Tennessee-based Dollar General (DG) is slated to release results for 1Q17 on Wednesday, May 31, 2017. The company will follow the earnings release with a conference call on June 1.

Wall Street has predicted a 2.8% decline in the discount retailer’s 1Q17 earnings per share to $1.00 per share. Total sales are projected to increase 6.1% to $5.6 billion.

The company came in ahead of the Wall Street earnings and revenue estimates in the last reported quarter.

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About Dollar General

Dollar General is one of the largest discount retailers in the United States. As of May 2017, the company operated 13,601 stores in 44  states.

Investors looking for exposure to DG through ETFs can consider the VanEck Retail ETF (RTH), which invests 2.6% of its total holdings in the company.

Valuations and stock recommendations

Dollar General is currently trading at a one-year forward price-to-earnings ratio of 16x, which is in-line with the three-year average of 17x. The company is trading at a discount to other variety store chains. Dollar Tree (DLTR), TJX Companies (TJX), and PriceSmart (PSMT) are trading at a one-year forward earnings multiple of 17.7x, 18.8x, and 27x, respectively.

The average 12-month price target by 30 analysts covering Dollar General is $79.8, indicating an upside of ~14% over the next one-year period.

In this series

In this series, we’ll preview Dollar General’s 1Q17 results. We’ll discuss the company’s recent financial performance, its stock market performance, and Wall Street recommendations for the company.

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