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On Tuesday, BofA Securities analysts increased their price target for Dollar General (NYSE:DG) stock to $135 from $115, while maintaining a Buy rating. The move reflects confidence in the company’s "Back to Basics" strategy, which includes SKU rationalization, inventory reduction, and distribution center resets. These initiatives are expected to enhance operational efficiencies over time. The stock, currently trading at $112.57 with a market capitalization of $24.7 billion, has shown strong momentum with a 30% gain year-to-date.
The analysts highlighted several catalysts for gross margin expansion. These include strategic initiatives like the DG Media Network and improvements in reducing shrinkage and damages. Such efforts are anticipated to contribute positively to the company’s financial performance. According to InvestingPro, Dollar General maintains a healthy gross margin of 29.59% and a solid current ratio of 1.19, indicating strong operational efficiency.
Dollar General is also focusing on initiatives to boost top-line momentum and capture market share. The company is investing in store remodels, expanding its digital and delivery capabilities, and reviving growth in non-consumable products. With revenue growth at 4.96%, InvestingPro data shows 11 analysts have revised their earnings estimates upward for the upcoming period, suggesting growing confidence in these initiatives.
The analysts have raised their earnings per share estimate for the fiscal year 2027 by 5 cents to $6.40. This adjustment is based on the anticipated benefits of the company’s strategic initiatives.
Overall, BofA Securities remains optimistic about Dollar General’s prospects, citing a variety of factors that are expected to drive future growth and profitability.
In other recent news, Dollar General has reported impressive financial results for the first quarter of 2025, surpassing Wall Street expectations. The company achieved earnings per share of $1.78, exceeding the forecast of $1.46, and revenue of $10.4 billion, slightly above the anticipated $10.25 billion. This strong performance reflects a 5.3% year-over-year increase in revenue and a 2.4% growth in same-store sales. Truist Securities responded by raising Dollar General’s stock price target to $112, maintaining a Hold rating. Similarly, CFRA upgraded the stock from a Sell to a Hold rating and increased the price target to $118, citing the company’s strategic initiatives and improved performance. Dollar General’s "Back to Basics" strategy has shown positive results, including strong traffic trends and successful store remodels. Despite these achievements, analysts remain cautious about potential challenges, such as tariffs and the need for further investments in pricing or wages. Dollar General plans to open 575 new stores in 2025, reflecting its commitment to growth and market expansion.
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