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On Tuesday, Truist Securities analysts reiterated a Hold rating on Dollar General stock (NYSE: NYSE:DG), maintaining their price target at $93. Their view aligns with the broader analyst consensus of 2.45 (Hold), with price targets ranging from $80 to $120. The analysts noted that the company’s first-quarter sales trends exceeded expectations, with a reported growth of 2.4% compared to their forecast of 2.2%. This improvement marked the first time since the early pandemic that Dollar General saw broad-based comp growth across all discretionary categories. According to InvestingPro data, the company has demonstrated solid revenue growth of 4.96% over the last twelve months.
The analysts attributed the positive sales trends to stable performance throughout the quarter, aside from the Easter shift. They highlighted that the growth in gross margins and flow-through was supported by these broad-based sales trends. The company maintains a gross profit margin of 29.59%. Despite the encouraging results, Truist Securities expressed concerns about declining traffic and the possibility that ticket increases were driven by price hikes.
Dollar General shares were up by 10% in pre-market trading, reflecting investor optimism about the company’s performance. However, the analysts cautioned that the stock price might already account for much of this improvement unless the positive trends prove to be sustainable.
The analysts are expected to provide further insights following Dollar General’s earnings call later today.
In other recent news, Dollar General has seen a mix of analyst ratings and price target adjustments. Telsey Advisory Group increased its price target for Dollar General to $100, maintaining a Market Perform rating, citing benefits from store remodels and digital strategies. Similarly, Bernstein raised its price target to $120, with an Outperform rating, due to improved sales forecasts and Dollar General’s strategic position amid economic shifts. On a different note, Evercore ISI maintained an In Line rating with a $100 target, expressing optimism for near-term earnings and sales growth.
However, CFRA downgraded Dollar General to a Sell, lowering the price target to $75, due to concerns about the company’s vulnerability in a challenging economic environment. CFRA highlighted potential difficulties in maintaining market share against competitors like Walmart (NYSE:WMT). Analysts noted that Dollar General’s core customer base of low- and fixed-income households could be impacted by economic pressures, potentially affecting sales performance. Despite these challenges, analysts from various firms have identified opportunities for Dollar General to improve operational efficiency and enhance in-store experiences. The company’s future financial outlook remains a topic of interest, with various analysts forecasting different earnings trajectories for the coming years.
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