Dollar General's Turnaround Seems Underway, CEO Return Brings Stability: These Analysts Look At Q4 Results, Outlook

Dollar General Corp DG shares were climbing Friday, after the company reported upbeat fourth-quarter earnings.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the release.

Telsey Advisory Group On Dollar General

Analyst Joseph Feldman upgraded the rating from Market Perform to Outperform, while lifting the price target from $155 to $170.

The return of Todd Vasos as Dollar General’s CEO has “brought stability to the business, instilled financial discipline, and renewed a sense of urgency to improve and grow,” Feldman said in the upgrade note. The company is taking steps in the right direction, which is reflected in the “two consecutive quarters of positive traffic (+4.0% in 4Q23) and sequential improvement in the trend as 4Q23 progressed,” he added.

“Looking ahead, we believe the continued execution of the strategy as well as lapping shrink and labor investments from prior years should help the company return to earnings growth in 2H24 and beyond,” the analyst wrote. He further stated that Dollar General could generate double-digit earnings growth in the back half of 2024 and face “continued solid trends in 2025.”

Check out other analyst stock ratings.

BofA Securities On Dollar General

Analyst Robert Ohmes maintained an Underperform rating while raising the price target from $100 to $118.

Dollar General reported its fiscal fourth-quarter earnings at $1.83 per share, beating Street expectations of $1.73 per share, Ohmes said in a note. The company’s comp rose by 0.7%, reflecting its 4% traffic growth was offset by ticket declines, he added.

Gross margins contracted by 138 basis points year-on-year to 29.5% due to “higher shrink and markdowns, lower inventory markups, and unfavorable mix, partially offset by a decrease in LIFO and transportation costs,” the analyst wrote. He added that the company will likely continue facing challenges in the first half of the year.

Goldman Sachs On Dollar General

Analyst Kate McShane reaffirmed a Buy rating, while bumping the price target from $147 to $169.

The decline in Dollar General’s shares following upbeat quarterly results and in-line guidance for fiscal 2024 appears overdone, McShane said.

“Investors appear concerned on the guide and that it may not be conservative enough given management commentary that the promotional environment could further normalize to pre-pandemic levels and a dependency on an improvement in shrink in 2H,” the analyst wrote. He added, however, the company’s outlook is supported by “an improving consumer backdrop and DG’s self-help efforts,” which have begun translating to improved top line momentum.

DG Price Action: Shares of Dollar General had risen by 1.60% to $152.46 at the time of publication on Friday.

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Photo: Courtesy Dollar General