Dollar General Q4 Earnings Preview: Analyst Estimates, Why Food Stamps Could Be An Item To Watch

Retailer Dollar General Corp DG is set to report fourth-quarter financial results before market open on Thursday, March 14.

Here are the key earnings estimates, what analysts were saying and key items to watch.

Earnings Estimates: Analysts expect Dollar General to report fourth-quarter revenue of $9.78 billion according to estimates from Benzinga Pro.

The company reported $10.2 billion in revenue in last year's fourth quarter. The company missed revenue estimates from analysts in three of the last five quarters.

Analysts expect Dollar General to report fourth-quarter earnings per share of $1.75, versus earnings of $2.96 per share in last year's fourth quarter. Over the past five quarters, Dollar General missed earnings per share estimates three times, matched expectations once and beat estimates once.

Dollar General beat both revenue and earnings per share estimates in the most recently reported third quarter.

Related Link: Retail Trends Unwrapped: Analyst Unveils Surprising Shifts In Consumer Spending As 2023 Looms

What Analysts Are Saying: Store checks and management commentary saw one analyst upgrading Dollar General shares.

JPMorgan analyst Matthew Boss upgraded shares from Underweight to Neutral and raised the price target from $120 to $158.

The analyst had comparable sales for the fourth quarter coming in flat, which was ahead of Street consensus estimates.

"Our latest store work and mgmt. access point to increased focus on in-stocks, store standards, improving customer service, and signage highlighting value with management citing a sequential turnaround timeline rather than a ‘snap your fingers' overnight inflection," Boss said.

The analysts said gross margin guidance could be flat for the company, but there was an upside opportunity for items such as consumables mix and Dollar General building out its own private fleet for transportation.

"Looking ahead, we see a more favorable YOY setup starting in Spring '24."

Channel checks by Goldman Sachs point to Dollar General prices being around 5% lower than rival Family Dollar, which is owned by Dollar Tree Inc DLTR.

"Based on our study, the price gap between DG and Family Dollar appears to be slightly wider within the grocery category," Goldman Sachs analyst Kate McShane said.

Continued improvement for sales trends at Dollar General are seen by Piper Sandler analyst Peter J. Keith.

The analyst has a Neutral rating and $127 price target.

Keith highlighted the company's "Back to Basics" strategy and its potential positive benefits in a recent investor note.

Key Items to Watch: Analysts were looking to hear more from Dollar General on the impact of changes to Supplemental Nutrition Assistance Program (SNAP) benefits.

Also referenced as food stamps, the SNAP benefits could see changes for many Americans in 2024. Dollar General is one of the retailers believed to benefit from the assistance program.

While some retailers have highlighted the impact SNAP benefits could have, both positively and negatively, Dollar General hasn't commented in recent quarters.

Investors and analysts will likely be interested to hear about the continued impact of inflation and rising consumer costs and how Dollar General was benefitting. The company could share which items are seeing increased attention from shoppers or which categories shoppers were staying away from.

DG Price Action: Dollar General shares were up 0.65% to $160.36 on Tuesday versus a 52-week trading range of $101.09 to $222.99. Shares of the company are up 19% year-to-date in 2024.

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Photo: Courtesy Dollar General