Dollar General Corporation (DG) finished Thursday’s session as one of the top-performing Zacks #1 Rank companies. Shares were up around 5.6%. Volume came very close to 1.9 million shares today, which was a bit above the daily average at north of 1.2 million.
The performance also made DG the best-performing retailer, a day after some less-than-spectacular news for the retail industry. It was announced on Wednesday that retail sales in June were off 0.5%, better then the month before but still worse than the consensus at a 0.2% decline.
We may be in the thick of earnings season right now, but DG reported its fiscal first quarter numbers in early June. (It won’t report again until September; as with many retailers, its year ends in January.) It’s most recent report had everything you could want in an announcement, including a positive earnings surprise, double-digit revenue growth, positive same-store sales growth and even an enhanced full-year profit outlook.
There are a good amount of retail companies in the Zacks #1 Rank List right now, but only 3 are from the retail-discount industry. Other than Dollar General, the other 2 names are 99¢ Only Stores (NDN) and Dollar Tree, Inc. (DLTR).
Earnings Estimates for Dollar General
During its fiscal first quarter report, Dollar General raised its full year EPS outlook to between $1.62 and $1.69, compared to the earlier guidance of $1.55 to $1.63. The company still expects sales growth of 8% to 10% with same-store sales up 4% to 6%.
In response to the outlook, earnings estimates moved higher. The Zacks Consensus Estimate for this fiscal year, ending January 2011, is $1.72 per share. That guidance is unchanged in 30 days, but is up 6.2% from 2 months ago. There are 16 total estimates for this fiscal year, as there are for next fiscal year as well.
Speaking of next fiscal year, which ends in January 2012, the Zacks Consensus Estimate of $2.04 per share suggests a year-over-year improvement of 18.6%. The outlook is also higher than 60 days by 4.6%.
Fiscal First Quarter
As for the fiscal first quarter itself, DG announced adjusted earnings per share of 42 cents, which was ahead of the Zacks Consensus Estimate by more than 23%. Dollar General has never missed quarterly earnings expectations; though it’s probably important to note that the company went public just last year and has only reported 3 times.
Sales jumped nearly 12% to $3.11 billion, versus $2.78 billion a year earlier. Same-store sales were up 6.7%.
Dollar General is a discount retailer in the U.S. that separates its merchandise into 4 categories: highly consumable, seasonal, home products and basic clothing. As has been said countless times before, the discount retailers have an edge in retail during tough economic circumstances because consumers seek out bargains as they cut back on expenses.
