Dollar General (DG) Beats Earnings Forecast by +3 Cents Per Share

Shares of Dollar General Corporation (DG) were up +2.87 or +3.94 percent to $75.68 per share in premarket trading on Tuesday after the company reported fiscal first quarter earnings that beat street estimates by $0.03 per share early this morning. Dollar General stock closed at $72.81 per share, up +0.22 or +0.30 percent in Monday's regular trading session.

Goodlettsville, Tennessee based Dollar General Corporation was founded in 1939 and is a domestic chain of discount stores operating more than 10,000 retail outlets in 40 U.S. states that employs over 90,000 people.
The company is not a "dollar store in that it sells off brand and close-out branded products for higher prices along with its discounted merchandise and typically opens stores in communities too small for Wal-Mart (WMT).

Dollar General reported it had net income of $253 million, or $0.84 per diluted share in the company's first quarter ended on May 1st, 2015. This compares to net income of $222 million or $0.72 per share in the same period one year ago.

Revenue for the first quarter increased to $4.92 billion versus $4.52 billion in 2014's first quarter, an increase of +8.8 percent. The analyst consensus was for the company to earn $0.81 per share on revenue of $4.94 billion.

The company reported same store sales rose +3.7 percent in the quarter, which was attributed to higher customer traffic and a higher average amount for transactions. The same store sales number improved in both consumables and non consumables, with increases in sales of tobacco products, candy and snacks, health care products and other perishables, while non consumables were strongest in apparel, seasonal and home products, which all posted gains.

Dollar General's gross profit as a percentage of sales increased +30.5 percent in the first quarter, an increase of +45 bps from the same period one year ago. Most of the increase in the company's gross profit rate was attributed to an improved inventory shrink rate along with lower transportation costs and higher inventory markups.

Rick Dreiling, Dollar Generals Chairman and Chief Executive Officer of Dollar General stated in the company's press release that, "In the first quarter, we made solid progress implementing our key initiatives with balanced growth across both consumables and non-consumable categories. Compared to the first quarter of 2014, same-store sales improved 3.7% and gross margin expanded by 45 basis points, contributing to diluted EPS growth of 17%. Looking ahead, we are confirming our full year guidance based on our results for the first quarter .

Dollar General reported it had repurchased 7.1 million shares of its own common stock for a total of $534.7 million for its share repurchase program. The company has bought back 51.5 million of its shares since December of 2011 at a cost of $2.8 billion, with an additional $688.8 million of share repurchases remaining under the company's repurchase program.

Guidance for the whole 2015 fiscal year is for sales to increase eight to nine percent over the previous year, with same store sales expected to rise 3 to 3.5 percent. Operating profit is expected to increase 7 to 9 percent over the previous year with diluted earnings per share expected to be in a range of $3.85 to $3.95.

Other News About DG

Goldman Sachs Adds Dollar General To Conviction Buy List, Sees 18% Return Potential

Goldman Sachs analysts raised the target price on the company's stock to $87 from $85.

Dollar General Opens 12,000th Store

Company opened its 12,000 store in Juliette, Georgia on May 30th.

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Published on Jun 2, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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