Dollar General Exceeds Estimates On Solid Same-Store Sales

Dollar General Corp. topped 2Q earnings and revenue estimates, driven by double-digit growth in same-store sales amid the coronavirus pandemic.

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The discount retailer Dollar General (DG) delivered 2Q adjusted earnings of $3.12 per share, beating the Street estimate of $2.47 per share. Sales of $8.68 billion also exceeded the consensus estimate of $8.36 billion. Earnings and sales jumped 89.1% and 24.4% on a year-over-year basis.

Same-store sales grew 18.8% in the July-ending quarter, beating the Street estimate of 14.9%, driven by an increase in average transaction amount, partially offset by a decline in customer traffic. Dollar General’s board also increased the share repurchase program authorization by $2 billion. (See DG stock analysis on TipRanks).

Oppenheimer analyst Rupesh Parikh said he looks “quite favorably upon the well-above-expectation Q2 delivery.” He added that “Management also restarted share buybacks and is accelerating key initiatives such as DG Pickup, DG Fresh, and NCI [Non-Consumables Initiatives], which should support ongoing share gains into FY21.” Parikh recommends a Buy on Dollar General with a price target of $225 (11.8% upside potential).

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 13 Buys and 2 Holds. The average analyst price target of $212.79 implies upside potential of about 5.7%, with shares already up 29% year-to-date.