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How Dollar General Is Positioned in 2019

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Recent analyst activity

On January 9, RBC raised its price target for Dollar General (DG) stock to $126 from $122. RBC also raised its price target for Dollar General’s key rival, Dollar Tree (DLTR), to $109 from $98. On January 7, KeyBanc upgraded Dollar General (DG) stock from “sector weight” to “overweight” and assigned a price target of $125. On January 4, UBS raised its price target for Dollar General to $125 from $120.

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In December, Dollar General reported better-than-expected results for the third quarter of fiscal 2018, which ended on November 2. However, the company disappointed investors by lowering its full-year fiscal 2018 earnings outlook to reflect the impact of expenses related to hurricanes Florence and Michael and increased transportation costs.

Price target revisions

Many analysts lowered their price targets for Dollar General following the announcement of the revised outlook. On December 5, Raymond James, RBC, and Morgan Stanley cut their price estimate for Dollar General. Further, on December 18, J.P. Morgan lowered its price target to $117 from $123. In contrast, Morgan Stanley increased its price target to $119 from $115 on December 13.

In 2018, Dollar General stock grew 16.2%, outperforming rival Dollar Tree, which declined 15.8% and the broader S&P 500 which fell 6.2%. Dollar Tree has now attracted the attention of Starboard Value, which believes that the company should consider strategic alternatives for its Family Dollar banner, including a sale.

As of January 8, Dollar General was rated a “buy” by 64% or 18 out of 28 stocks. The stock was rated a “hold” by nine analysts while one analyst had a “sell” recommendation.

The 12-month price target for Dollar General stock is $116.96, which implies an upside potential of about 3%, compared to the closing price on January 8.

Next in this series, we’ll discuss the expectations for Dollar General’s sales.

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