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On Wednesday, KeyBanc analysts maintained a Sector Weight rating on Dollar General (NYSE:DG) stock following the company’s first-quarter results, which surpassed expectations. The strong performance was attributed to strategic initiatives that have begun to take effect. According to InvestingPro data, the stock has surged over 15% in the past week and 43% over the last six months, though technical indicators suggest the stock may be entering overbought territory.
Dollar General reported a 2.4% increase in comparable store sales for the first quarter, supported by increased tradedown activity and positive trends across various categories, including discretionary items. The company’s earnings per share exceeded forecasts due to higher sales and robust gross margin performance, which benefited from reduced shrink. The company maintains strong fundamentals with a healthy current ratio of 1.23 and generated $1.9 billion in levered free cash flow over the last twelve months.
Management at Dollar General has updated its guidance for 2025, incorporating the first-quarter results, the effects of tariffs, and the uncertain macroeconomic environment. The company raised its expectations for comparable store sales and overall sales for the year, while also increasing the lower end of its earnings per share range.
KeyBanc analysts expressed optimism about the first-quarter results, noting the impact of a later Easter and the initial benefits from Dollar General’s "Back to Basics" strategy. Despite the positive outlook, analysts suggested that the company’s current earnings per share guidance might be conservative.
While acknowledging the potential for further growth, KeyBanc analysts indicated that the recent increase in Dollar General’s share price and its current valuation could limit additional upside. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels. Discover more insights and 8 additional ProTips for Dollar General, along with comprehensive analysis in the Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Dollar General has attracted attention with its first-quarter 2025 results, reporting an adjusted earnings per share of $1.78, which surpassed analysts’ estimates from both Telsey and FactSet. The company’s comparable sales increased by 2.4%, exceeding expectations and contributing to a positive outlook for the year. This performance has led several analyst firms to adjust their ratings and price targets for Dollar General. Oppenheimer upgraded the stock to outperform, with a new price target of $130, citing confidence in the company’s resilience and strategic goals. Similarly, BofA Securities raised its price target to $135, maintaining a Buy rating and highlighting the potential benefits of Dollar General’s "Back to Basics" strategy. Meanwhile, Telsey increased its price target to $120, reflecting optimism about the company’s guidance and market share growth. Truist Securities also raised its price target to $112, although it maintained a Hold rating, expressing caution about future trends. Lastly, CFRA upgraded Dollar General from a Sell to a Hold rating, with a new price target of $118, acknowledging the company’s strategic initiatives and improved performance.
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