The largest discount store in the U.S., Dollar General (DG, Financial) is about to unfold its first quarter numbers of fiscal year 2015 on June 2 before the market opens and all analysts and investors are waiting for the results which are expected to meet estimates of the Street in the presence of currency headwinds. Let’s quickly take a glance at what are the major factors that could play a vital role in the quarterly numbers and how analysts are opining on the first quarter earnings of the discount store amid intense competition.
The major attributes playing a role
The company has already provided caution on the negative impact of the West Coast port disruption on its earnings for the first quarter of 2015. Also as the low margin product sales have been improving over and above those having higher margin, it is imperative that such a segmental buyer behavior could put pressure on the discount retailer’s margins going forward.
But the company remains optimistic on the upcoming quarter numbers as it has shown commitment towards managing prices in a better fashion, containing costs, managing inventory efficiently and by opting for operational initiatives to reduce costs and improve profits.
Bearing such factors in mind, several analysts are of the opinion that Dollar General would post better earnings than the last quarter of the past fiscal year when it posted in-line earnings.
The Zacks analysts’ are expecting earnings for the quarter to be around $0.82 per share, which is surely a remarkable improvement what that reported year back when the EPS stood at $0.72 a share.
Analysts’ opinion remain optimistic
MKM Partners have reiterated a buy rating on Dollar General’s stock with a target price of $82 on last Friday, a few days before the formal earnings release. It is to be noted that the equity research firm is expecting same store sales growth to be firm for the retailer and its margins to be better when compared to the earlier reported quarters. The firm has stated that the same-store sales of Dollar General would improve by 3.5% and has also cited that the Street’s estimate of 4.2% growth is quite achievable by the discount store operator. Though extreme winter climate took a toll on the February sales of Dollar General, the sales picked up fresh momentum in March and April and hence the firm is hopeful to see a decent gain in the revenue earned during the first quarter.
The equity firm’s analyst, Partrick McKeever has estimated that the first quarter’s revenue would stand at around $4.91 billion and has forecasted operating margins to increase by 10 basis points in the quarter when compared on a year-over-year basis.
Presently, as per Bloomberg 18 analysts have rated Dollar General as a buy while 10 recommend a hold and only 2 rate it as sell stock.
Last word
Though the Street is optimistic on the first quarter results and even other analysts have suggested on similar lines, all investors are awaiting the actual numbers to be out for the quarter after which they would be able to assess Dollar General’s performance against the set expectations. So, let’s stay tuned!
