Retail

What to Expect From Dollar General Earnings

Dollar General Corp. (NYSE: DG) is scheduled to report its fiscal first-quarter earnings before the markets open Tuesday morning. Thomson Reuters has consensus estimates of $0.82 in earnings per share (EPS) on $4.94 billion in revenue. In the same period of the previous year, the retailer posted EPS of $0.72 and revenue of $4.52 billion.

In its most recent earnings report, the company said that it would pay its first-ever quarterly dividend payment of $0.22, payable in late April to shareholders. At current prices the dividend yield works out to around 1.2%.

24/7 Wall St. has named Dollar General as one of its stocks to own for the decade.

This company remains the king of dollar stores. Back in 2010 the theme under a “new normal” and “post-new normal” that we expected to remain was the rise of the dollar stores against Wal-Mart Stores Inc. (NYSE: WMT) and other giants. Dollar stores have continued to reach up beyond the one-dollar mark, and this trend will remain. Its shares were underperforming peers in 2010 because the private equity backers were still unloading stock. Those former owners are gone and shareholders now have complete control.

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This store in particular is one of the nation’s top discount retailers, carrying a huge inventory of items designed to appeal to a cost-conscious consumer. It announced recently that it will be accelerating new store openings next year, after losing a furious bidding war for Family Dollar Stores Inc. (NYSE: FDO) to rival Dollar Tree Inc. (NASDAQ: DLTR).

Dollar General had to back off its merger ambition, and now rivals Dollar Tree and Family Dollar are merging. While this is more firm competition, the real issue is that it levels the field when it comes to the post-dollar stores ahead. Dollar General is now worth over $22 billion, and while, as previously mentioned, it had no dividend in 2010, it has recently started paying a dividend with an introductory yield of 1.2% that is almost certain to grow in time — and it is a winner from a strong dollar.

In 2010 it had 8,900 stores in 70% of states, and it had grown close to 12,000 stores in 43 states in early 2015. The discount retail giant plans to open 730 stores this year, representing a staggering 6% square footage growth, with another 875 stores to be relocated or remodeled. These aggressive expansion plans have been applauded by analysts on Wall Street.

Shares of Dollar General were up 0.4% at $72.90 Monday afternoon. The stock has a consensus analyst price target of $81.55 and a 52-week trading range of $53.70 to $76.99.

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