Buy, Hold or Sell Dollar General? Key Tips Ahead of Q1 Earnings

Core Viewpoint - Dollar General Corporation is set to release its first-quarter fiscal 2025 earnings results on June 3, which could indicate the effectiveness of its turnaround strategy and influence investor decisions on buying, holding, or selling the stock [1]. Financial Performance - Revenue is expected to increase to $10.29 billion, reflecting a 3.8% year-over-year improvement, while earnings per share (EPS) is projected to decline by 10.9% to $1.47 [2][7]. - The company has a trailing four-quarter negative earnings surprise of 1.2% on average, but it beat the Zacks Consensus Estimate by 12% in the last reported quarter [3]. Earnings Predictions - The Earnings ESP for Dollar General is +2.64%, and it holds a Zacks Rank of 3 (Hold), suggesting a likelihood of an earnings beat [4][5]. - The consensus estimates for future quarters show stability, with EPS projected at $1.56 for the next quarter and $5.58 for the current year [3]. Strategic Initiatives - Dollar General's focus on expanding market share in consumables and non-consumables, along with proactive pricing strategies and private-label offerings, is expected to support revenue growth [6][7]. - Initiatives like DG Fresh, SKU rationalization, and digitization are anticipated to improve same-store sales, projected to increase by 0.8% for the quarter [7][8]. Market Position and Stock Performance - Dollar General shares have increased by 35.3% over the past three months, outperforming the industry average of 0.2% and key competitors [11]. - The stock is currently trading at a forward P/E ratio of 16.84, which is a discount compared to the industry average of 33.73 and the S&P 500's P/E of 21.71 [12]. Valuation Comparison - Dollar General's P/E ratio is higher than Target's (12.03) and Dollar Tree's (16.71) but lower than Costco's (53.65), indicating a mixed valuation landscape [13]. Investment Outlook - While Dollar General shows signs of operational discipline and potential for gradual recovery, near-term margin pressures and earnings challenges suggest that current investors may hold the stock, while potential investors might wait for clearer signs of margin stabilization [16].