Dollar General: Earnings Preview
Analysts expect the company to register second-quarter earnings per share of $2.38, up 37% from the same quarter last year.
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Shahid is a business graduate, with a knack for writing on business and finance topics.
2020-08-25 09:24

Dollar General (NYSE: DG), a variety store retailer with over 16,000 stores in the US, will report its second-quarter earnings on August 27, 2020. Founded in 1939 by James Luther Turner and Cal Turner as a family business, Dollar General has been growing tremendously, securing a place in Fortune 500 companies, with annual sales of about $29 billion in 2019. Headquartered in Goodlettsville, Tennessee, the company has about 135,000 employees working in different stores.

The company's stock has gained 27% YTD after starting the year at $156.54 and closed at $198.93 on August 21, 2020. The stock had plummeted to $137.23 on March 25, 2020, amid the coronavirus pandemic lockdown restrictions and has rebounded since then to reach $198.

Analysts expect the company to register second-quarter earnings per share of $2.38, up 37% from the same quarter last year. On the other hand, revenues for the quarter are estimated to reach $8.28 billion, representing a rise of 18.6% from Q2 2019.

The analysts predict a positive earnings ESP (Expected Surprise Prediction) of 4.89 %, which implies that the analysts have revised their estimates about the company and, resultantly, will beat the analysts' earnings predictions.

Dollar General has been delivering earnings surprises for the last four consecutive quarters. In the first quarter of 2020, the company delivered a positive earnings surprise of 50.59%, beating analysts' estimates of $1.70 against the reported $2.56 per share.

Positive factors that can drive earnings

The discount retailer performed well in Q1 2020 amid the coronavirus pandemic, primarily because of its low-cost essential and daily-use consumable items that people buy irrespective of the state of the economy. The company is aggressively planning to open around 1,000 new stores this year, with a special focus on the areas where Amazon's boxes do not reach. Moreover, Dollar General is working to offer online ordering and pick up functionality to its customers. The online-order-and-pick-up e-commerce solution will allow its customers to place their orders online and then pick up their shipments from a nearby store. Dollar General is already offering an in-store app at many of its stores, where customers can calculate the total value of their cart, including taxes and discounts, before proceeding to the cash counter. However, the online order and pick up feature is likely to take some time as the system requires integration with the company's supply chain. If established successfully, the system can drastically improve the company's top-line.

Conclusion

The company has many positives which can help drive its revenues upwards. Analysts are also upbeat about the stock and the stock has been consistently beating the analysts' revenue and earnings estimates as well, which is a good omen for the company and its shareholders. Zacks, a stock research company, has a rating of 2 (Buy) for the Dollar General stock.


Disclaimer: I have no positions in any of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.

Published On
2020-08-25 09:24

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About the Author
Shahid is a business graduate, with a knack for writing on business and finance topics.

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