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On Saturday, Bernstein analysts adjusted their outlook on Dollar General (NYSE:DG) shares, citing improved performance forecasts. The price target for the retail chain was increased to $120.00, up from the previous $105.00, while maintaining an Outperform rating on the stock. The company’s shares, currently trading at $101.39, have shown strong momentum with a 37.25% gain over the past six months and an impressive 35.64% return year-to-date.
The revision in the price target comes as Bernstein analysts, including Zhihan Ma, anticipate higher comparable sales for the second to fourth quarters of fiscal year 2025 and for fiscal year 2026. According to InvestingPro data, eight analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company’s outlook. The analysts expect Dollar General to benefit from consumers trading down to more affordable options amid varying economic conditions.
In addition to raising sales expectations, Bernstein analysts made minor tweaks to other financial metrics for Dollar General. These adjustments include changes in the tax rate and other items that impact the company’s bottom line.
Bernstein’s valuation of Dollar General is now based on a 17 times multiple on the company’s projected fiscal year 2026 earnings per share (EPS) of $7.05. This multiple expansion reflects both an increase in growth expectations and Dollar General’s favorable position in the current economic landscape, which includes low exposure to tariffs.
The new price target of $120.00 is set at one times turn below Dollar General’s current next twelve months (NTM) price-to-earnings (P/E) multiple of approximately 18 times. Bernstein’s analysis indicates a bullish outlook for the company’s stock performance in the coming years.
In other recent news, Dollar General has experienced a series of significant developments. The company is set to announce its first-quarter earnings, with Evercore ISI anticipating positive results, including a modest upside in comparable store sales and earnings per share. Analyst M. Michael Montani has increased his EPS estimate to $1.52, surpassing the consensus of $1.47. In contrast, CFRA has downgraded Dollar General’s stock rating to Sell, citing concerns about the company’s vulnerability in a weakening economic environment and a revised lower price target of $75. Meanwhile, Melius Research upgraded Dollar General’s stock rating to Buy, with a price target of $110, noting the company’s current valuation as attractive despite competitive pressures from Walmart (NYSE:WMT).
Moody’s Ratings has downgraded Dollar General’s senior unsecured notes to Baa3 from Baa2, reflecting decreased interest coverage and weakened operating margins. The company has paused share repurchases, opting to use excess cash flow to reduce outstanding debt. Despite these challenges, the stable outlook is based on expectations of improved operating margins and financial policies favoring debt reduction. Additionally, Bernstein has maintained an Outperform rating on Walmart, highlighting the potential benefits for the company and Dollar General in an economic downturn. Walmart’s strategic focus on competitive pricing and e-commerce is expected to continue driving market share gains.
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