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On Wednesday, Goldman Sachs analysts raised the price target for Dollar General (NYSE:DG) stock to $115 from $96, while maintaining a Buy rating. According to InvestingPro data, the stock appears fairly valued at current levels, with analyst targets ranging from $80 to $135. This decision follows Dollar General’s recent performance in its first quarter, where the company reported better-than-expected top-line results and earnings per share of $5.24.
Dollar General’s stock closed up 15.9% on Wednesday, significantly outperforming the S&P 500, which rose by 0.6%. The retailer’s first-quarter comparable sales exceeded expectations, marking a positive shift in non-consumable goods sales for the first time in several quarters.
The company’s margin flow showed improvement despite markdowns, with a gross profit margin of 29.8%, and Dollar General also raised its guidance for the fiscal year 2025. Goldman Sachs analysts expressed confidence in the updated guidance, suggesting it might be conservative. Unlock more insights with InvestingPro, which offers 8 additional exclusive tips and comprehensive financial analysis for Dollar General.
The analysts reiterated their Buy rating for Dollar General stock, setting a 12-month price target of $115. This reflects optimism about the company’s future performance based on its recent financial results and strategic outlook.
Dollar General’s positive quarter and revised guidance have contributed to a favorable view from Goldman Sachs, underscoring the company’s potential for continued growth.
In other recent news, Dollar General has reported first-quarter earnings that exceeded expectations, with adjusted earnings per share reaching $1.78, surpassing both Telsey’s estimate of $1.49 and the FactSet consensus of $1.48. The company also experienced a 2.4% increase in comparable store sales, supported by increased tradedown activity and positive trends across various categories. Following these strong results, Dollar General has updated its guidance for 2025, raising expectations for comparable store sales and overall sales for the year. Analysts from Citi noted the company’s strong performance in the first quarter, attributing some of its success to the trade-down effect, which has attracted middle- and higher-income consumers.
Oppenheimer has upgraded Dollar General’s stock rating to outperform, setting a new price target of $130, while Telsey raised their price target to $120 from $100. Morgan Stanley (NYSE:MS) also increased its price target to $115, citing a positive outlook on the company’s sequential improvement in comparable sales. Despite these upgrades, Citi analysts expressed concerns about Dollar General’s ability to compete with larger retailers like Walmart (NYSE:WMT) in terms of delivering value and convenience. Additionally, Dollar General is expanding its digital presence by planning to extend same-day delivery services to 10,000 locations, a move aimed at enhancing its digital channel offerings. These developments highlight the company’s strategic initiatives and operational strengths, while also acknowledging the challenges posed by macroeconomic factors and competition.
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