ZACKS·2025-12-06 02:26Core Insights - Retail sales are projected to reach record levels during the holiday season, with consumers remaining price sensitive, benefiting discount retailers like Dollar General and Dollar Tree [1] Group 1: Company Performance - Dollar General reported Q3 sales of $10.64 billion, a 4% year-over-year increase, surpassing estimates of $10.61 billion, with same-store sales up 2.5% YoY and Q3 EPS of $1.28, a 44% increase, exceeding expectations by 39% [4] - Dollar Tree's Q3 sales fell to $4.74 billion from $7.56 billion year-over-year but slightly exceeded estimates, with Q3 EPS rising 8% to $1.21, surpassing expectations by 11%, and same-store sales increased 4% [4][8] Group 2: Guidance and Expectations - Dollar General raised its full-year EPS guidance to $6.30-$6.50 from $5.80-$6.30, with full-year sales projected at $42.52-$42.6 billion [7] - Dollar Tree adjusted its full-year EPS guidance to $5.60-$5.80 from $5.32-$5.72, with annual sales expected to contract 37% to $19.39 billion [8] Group 3: Stock Performance and Valuation - Dollar General's stock has increased by 75% this year, while Dollar Tree's shares are up over 60%, significantly outperforming the broader market [2][3] - Both companies are trading at forward earnings multiples of 20X, below the S&P 500 average of over 5X, indicating potential value for investors [9] Group 4: Strategic Considerations - Both Dollar General and Dollar Tree hold a Zacks Rank 3 (Hold), suggesting long-term value, with Dollar Tree potentially being a better option if consumer spending pressures continue [10] - Both companies are considered appealing buy-the-dip candidates if a market pullback occurs, with potential for positive EPS revisions following their Q3 results [11][13]