Cutthroat Competiton Amid Stubbornly High Inflation Ails Dollar General, This Analyst Slashes Price Target By 20%

Loop Capital Markets analyst Anthony Chukumba reiterated a Buy rating on the shares of Dollar General Corporation DG, lowering the price target to $200 from $250.
The analyst notes that the company has been bearing the brunt of macroeconomic woes like stubbornly high inflation, reduced US income tax refunds, and lower SNAP benefits.
Dollar General recently reported worse-than-expected first-quarter results, cutting its FY23 sales growth outlook. The company sees FY23 EPS in the range of an approximate 8% decline to flat, compared to its previous expectation of growth of approximately 4%-6%.
The analyst notes that increased competition from grocery, drug, convenience, discount, and deep-discount retailers, and weakness in U.S. consumer spending, particularly during the holiday selling season, is likely to weigh on the stock.
Of the other multiple risks associated with investing in Dollar General, the analyst cautions of increased gasoline, diesel fuel, and energy prices, potentially increasing Dollar General's distribution costs.
The analyst notes that the company's EPS in the coming quarter will be dragged by a $40 million store labor hour investment.
Also Read: Dollar General Analysts Slash Their Forecasts After Downbeat Q1 Results
Price Action: DG shares are trading lower by 3.45% to $160.40 on the last check Monday.

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