Dollar General Anticipates Q1 Revenue Growth, Earnings to Decline

Discount retailer Dollar General Corporation (DG) is expected to report an increase in its top-line outcomes for the very basic quarter of fiscal 2023 on June 1. Zacks’s ideal revenue estimate is $9,469 million, indicating an 8.2% improvement compared to the same quarter of the previous year.

However, the company’s bottom-line performance is expected to decline from the prior-year quarter. The Zacks Consensus Estimate for first-quarter earnings per share remains stable at $2.38, suggesting a 1.2% decline from the reported figure in the year-ago period.

Dollar General has historically delivered negative earnings surprises, with a trailing four-quarter average of 0.6%. However, the company surpassed the Zacks Consensus Estimate in the previous quarter by 0.7%.

The company’s better pricing, private-label offerings, and efficient inventory management likely contributed to the expected growth in Q1 revenues. In addition, Dollar General’s focus on the low-to-middle-income consumer segment, coupled with its real estate growth strategy, positions it well to gain market share. The company has also emphasized consumable and non-consumable categories to drive customer traffic.

Additionally, Dollar General has implemented various initiatives, such as DG Fresh, Fast Track, digitization, and a private fleet, expected to contribute to same-store Dollar General sales growth.

However, margin performance remains a concern. During the last earnings call, management indicated potential soft earnings growth in the year’s first half due to headwinds from sales mix pressure, higher interest expenses, and increased shrinkage and damages. The company anticipated these headwinds to be more pronounced in the first quarter, including an estimated year-over-year increase in interest expenses of approximately $40 million.

Based on our proven model, Dollar General is not expected to beat earnings estimates this time. While it holds a Zacks Rank #3, its Earnings ESP is -1.36%.

Alternatively, here are three companies that may surpass earnings estimates based on our model:

  1. Costco (COST): Earnings ESP of +0.04% and a Zacks Rank #3. The company is projected to report an increase in bottom-line results for its third quarter of fiscal 2023.
  2. Macy’s (M): Earnings ESP of +2.81% and a Zacks Rank #3. The company will likely report a decline in earnings for the initial quarter of fiscal 2023.
  3. Dollar Tree (DLTR): Earnings ESP of +0.59% and a Zacks Rank #3. The company is expected to report a decrease in earnings for its second quarter of fiscal 2023.

It is important to note that the Zacks Earnings ESP (Expected Surprise Prediction) Filter can provide insights into stocks likely to outperform or underperform earnings estimates before they are reported.

Please remember that investment decisions should not be solely based on the outcome of one particular quarter’s earnings report. Therefore, conducting thorough research and analysis is crucial before making investment decisions.

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