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Investing.com - Truist Securities raised its price target on Dollar General (NYSE:DG) to $119.00 from $112.00 on Wednesday, while maintaining a Hold rating on the discount retailer’s stock. According to InvestingPro data, the company’s stock has shown remarkable strength with a 54.89% return year-to-date, trading near its Fair Value.
The firm increased its valuation multiple to 20x forward earnings from 19x previously, though this still represents approximately a 15% discount to the broader market. With the company currently trading at a P/E ratio of 21.5x and scheduled to report earnings on August 28, Truist indicated that based on second-quarter trends, Dollar General will likely raise the midpoint of its current earnings guidance range of $5.20-$5.80 per share and narrow the range.
Dollar General posted positive comparable sales across all four merchandise categories in the early part of the year, which boosted both sales and margins. This performance marks a significant improvement for the retailer after it was "essentially being left for dead" in late 2024 and early 2025. InvestingPro analysis reveals the company has maintained healthy profitability with a 29.8% gross margin and shows strong momentum with a 60% price return over the past six months.
Despite the improved performance, Truist expressed concerns about the sustainability of these trends, noting that consumables have continued to grow as a percentage of Dollar General’s sales mix every year since the global financial crisis, except during the early pandemic period.
Truist maintained its Hold rating due to continuing concerns over competition from Walmart, particularly given Dollar General’s significant stock re-rating to approximately 20x calendar year 2025 earnings estimates and 18x calendar year 2026 earnings estimates.
In other recent news, Dollar General Corporation has announced a new partnership with Uber Technologies, Inc., allowing customers to order items from over 14,000 Dollar General and pOpshelf locations via the Uber Eats platform. This development aims to enhance customer convenience by offering on-demand or scheduled delivery of food and household essentials. Meanwhile, Dollar General’s stock has seen several analyst updates. Piper Sandler has raised its price target for Dollar General to $115, citing benefits from the company’s elevated store remodel program and modest store growth, which are expected to boost comparable store sales by approximately 2% over the coming years. Loop Capital also raised its price target to $120, driven by improved store execution, including cleanliness and merchandise availability. Additionally, Bernstein SocGen has reiterated an Outperform rating with a price target of $126, highlighting Dollar General as its "top pick" for the next six to nine months. In other company news, Dollar General announced that its Chief Financial Officer, Kelly M. Dilts, will resign effective August 28, 2025, to pursue another opportunity, and the company has begun the search for her successor.
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