Retail

Why Analysts Are Pumped on Dollar General

courtesy of Dollar General Corp.

Dollar General Corp. (NYSE: DG) has been receiving high praise from investors and analysts recently. The stock is up nearly 20% year to date, and it rose about 2% over the course of the past week. Keep in mind that this company made our list of stocks to own for the next decade on the strength of its sales growth, low costs and dividend payment.

This company’s main rival, Dollar Tree Inc. (NASDAQ: DLTR), was near completion of its acquisition of Family Dollar Stores, and the company’s stock bounced around with Dollar General’s until last month, when Dollar General shares jumped more than 10% after reporting $1.30 in earnings per share (EPS) and $5.29 billion in revenue, well above consensus estimates calling for EPS of $1.17 and revenues of $4.94 billion.

Dollar General also boosted its annual dividend from $0.88 per share to $1.00 per share. Dollar Tree does not pay a dividend, and its shares dipped after fourth-quarter results failed to live up to expectations. And though neither store is near in size to Wal-Mart Stores Inc. (NYSE: WMT), Dollar General is outperforming the mega-retailer while Dollar Tree is trailing it in share price gains.


A few analysts weighed in on the stock:

  • BB&T has a Buy rating and raised its price target to $94 from $89.
  • Sterne Agee CRT has a Buy rating and raised its price target to $93 from $88.
  • Stifel has a Buy rating and raised its price target from $90 to $100.
  • Goldman Sachs raised its target price to $92.
  • Jefferies raised its target price to $97.
  • Piper Jaffray has an Overweight rating.

Shares of Dollar General last traded at $87.31, with a consensus analyst price target of $91.87 and a 52-week trading range of $59.75 to $86.99.

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