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On Tuesday, Barclays (LON:BARC) analysts reaffirmed an Overweight rating on Dollar General (NYSE:DG) stock, maintaining a $100.00 price target. According to InvestingPro data, analyst targets currently range from $80 to $120, with the stock showing strong momentum, up 30% year-to-date. The analysts highlighted positive sales and gross margin figures, which exceeded expectations, driven by improvements in shrink and reduced damages. Dollar General reported a 2.4% increase in comparable sales, surpassing the anticipated 1.2%.
Earnings per share for the company were reported at $1.78, outperforming both Barclays’ projection of $1.30 and the consensus estimate of $1.46. The earnings boost was attributed to higher sales and an improved gross margin rate of 29.6%, although selling, general, and administrative expenses remained high, as previously guided. InvestingPro analysis shows the company maintains healthy liquidity with a current ratio of 1.19, indicating strong operational efficiency.
The gross margin increased by 78 basis points, benefiting from lower shrinkage and higher mark-ups. The company noted improvements in damages and expects the promotional environment to remain stable year-over-year. Inventory levels remain tight, with a 7% decrease per store.
The analysts also raised questions about whether the 2.4% comparable sales growth trend will persist into the second quarter. Dollar General faced challenging comparisons in June, which are expected to ease in July, yet the company successfully managed a difficult comparison at the start of the first quarter.
Guidance for the top line was raised, while the high-end earnings per share guidance remained unchanged, reflecting considerations such as tariffs. The analysts deemed this approach prudent at this stage in the year.
In other recent news, Dollar General’s first-quarter earnings and revenue results surpassed expectations, prompting Jefferies to maintain a Buy rating with a price target of $110. The company reported positive growth in comparable store sales, driven by increased average transaction amounts, despite a decline in customer traffic. Dollar General has raised its sales and comparable store sales outlook for the year, alongside increasing the lower end of its earnings per share guidance. Telsey Advisory Group adjusted its price target to $100, noting the benefits of store remodels and strategic updates, while maintaining a Market Perform rating. Bernstein raised its price target to $120, citing improved performance forecasts and a favorable economic position. Evercore ISI maintained an In Line rating with a $100 target, expressing optimism about Dollar General’s operational improvements and sales momentum. Truist Securities, however, retained a Hold rating with a $93 target, highlighting concerns about declining traffic despite positive sales trends. These developments reflect a mix of optimism and caution among analysts regarding Dollar General’s future performance.
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