Dollar General (DG) Gains But Lags Market: What You Should Know

Dollar General (DG) closed at $236.96 in the latest trading session, marking a +0.33% move from the prior day. This move lagged the S&P 500's daily gain of 0.48%. Meanwhile, the Dow gained 0.2%, and the Nasdaq, a tech-heavy index, lost 0.01%.

Heading into today, shares of the discount retailer had gained 4.38% over the past month, outpacing the Retail-Wholesale sector's loss of 10.21% and the S&P 500's loss of 8.48% in that time.

Dollar General will be looking to display strength as it nears its next earnings release. In that report, analysts expect Dollar General to post earnings of $2.33 per share. This would mark a year-over-year decline of 17.38%. Our most recent consensus estimate is calling for quarterly revenue of $8.7 billion, up 3.51% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $11.38 per share and revenue of $37.39 billion, which would represent changes of +11.9% and +9.26%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Dollar General. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Dollar General is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, Dollar General is currently trading at a Forward P/E ratio of 20.75. Its industry sports an average Forward P/E of 20.35, so we one might conclude that Dollar General is trading at a premium comparatively.

We can also see that DG currently has a PEG ratio of 1.81. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DG's industry had an average PEG ratio of 1.85 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 61, which puts it in the top 25% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow DG in the coming trading sessions, be sure to utilize Zacks.com.

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