On Friday, BMO Capital Markets adjusted its outlook on Dollar General Corp (NYSE:DG), reducing the retailer's stock price target to $140 from $150 while maintaining a Market Perform rating.
The revision comes after Dollar General reported first-quarter earnings for fiscal year 2025, which included positive aspects such as earnings per share (EPS) and comparable store sales that surpassed expectations, along with notable customer traffic growth. Additionally, the company has upheld its full-year EPS guidance.
Despite these favorable results, remarks from the management regarding core business strategies and challenges may have left investors wanting. Moreover, the latest 10-Q filing from the company shed light on potential risks that could affect the timeline for achieving over 10% EPS growth.
BMO Capital's analyst suggested that Dollar General's shares might become more appealing if the company can demonstrate a consistent 10% growth in EPS. However, the firm is adopting a cautious stance due to the emerging risks identified. The new price target of $140 is based on approximately 17 times the firm's unchanged earnings estimate for fiscal year 2025.
InvestingPro Insights
Following the recent adjustment by BMO Capital Markets on Dollar General Corp's (NYSE:DG) outlook, InvestingPro data and tips provide additional context for investors. Despite a challenging week with a significant price drop, Dollar General remains a key player in the Consumer Staples Distribution & Retail industry.
The company's liquid assets are well-positioned to cover short-term obligations, and analysts remain optimistic about its profitability for the current year. Notably, Dollar General has maintained profitability over the last twelve months as of Q1 2023.
InvestingPro data highlights a P/E ratio of 17.04, closely aligning with BMO Capital's valuation basis for their revised price target. The company's market capitalization stands strong at $28.1B USD, and it has demonstrated a gross profit margin of 30.29% in the last twelve months. Moreover, Dollar General has shown resilience with a dividend yield of 1.84% as of April 2024, coupled with a 7.27% dividend growth in the same period.
For investors seeking a deeper dive into Dollar General's financials and potential, InvestingPro offers additional insights and analysis. With the use of coupon code PRONEWS24, investors can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable InvestingPro Tips. Currently, there are 5 additional tips available on InvestingPro that could further guide investment decisions regarding Dollar General.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.