Dollar General (DG) to Post Q3 Earnings: A Peek Into Comps

Market watchers are eagerly awaiting Dollar General Corporation’s DG third-quarter fiscal 2023 results, scheduled to be reported on Dec 7 before market open. This time, too, investors’ focus will center around same-store sales, the key metric to gauge the company’s performance.

Insights Into Comparable Sales

Before delving into the third-quarter scenario, let's revisit the second quarter.

A glance at second-quarter results reveals a 3.9% increase in net sales to $9.8 billion, showcasing growth in both consumable and non-consumable product sales. However, a marginal decrease of 0.1% in same-store sales indicates financial constraints among core customers. The decline in same-store sales continued into August. Dollar General attributes this decline to lower average tickets as it laps significant price increases from 2022.

While Dollar General acknowledges the challenges in the sales line, particularly in discretionary purchases, the strategic changes announced aim to address these issues. Investors will be keenly observing the impact of accelerated inventory rightsizing, increased labor investment and other initiatives on the company’s performance.

The interplay of customer traffic and increased average ticket, primarily due to inflation, will be the focal point in the third quarter. We note that consumers are adopting a more cautious stance toward their disposable income, signaling a return to more conservative spending habits. This shift in consumer sentiment is reverberating across various merchandise categories. We expect third-quarter comparable sales to decline 2%.

As Dollar General navigates softening sales trends, it is focusing on enhancing supply chain, offering customer-friendly prices, and embracing digitization.

Dollar General Corporation Price, Consensus and EPS Surprise

Dollar General Corporation Price, Consensus and EPS Surprise

Dollar General Corporation price-consensus-eps-surprise-chart | Dollar General Corporation Quote

How Are Estimates Shaping Up?

The Zacks Consensus Estimate for revenues stands at $9.65 billion, indicating an increase of 1.9% from the prior-year reported figure. The Zacks Consensus Estimate for third-quarter earnings per share has fallen by 4% to $1.19 in the past 30 days. The figure suggests a sharp decline of 48.9% from the year-ago period.

Our proven model does not conclusively predict an earnings beat for Dollar General this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.

Dollar General has a Zacks Rank #4 (Sell) and an Earnings ESP of -3.22%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:

Dollar Tree DLTR currently has an Earnings ESP of +0.25% and a Zacks Rank #3. The company is likely to register a bottom-line increase when it reports fourth-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for the quarterly earnings per share of $2.65 suggests an increase from $2.04 reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar Tree’s top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $8.67 billion, which indicates a rise of 12.4% from the figure reported in the prior-year quarter.

Costco COST currently has an Earnings ESP of +0.72% and a Zacks Rank of 3. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $3.44 implies a rise of 11% from the year-ago reported number.

Costco’s top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $57.62 billion, which calls for an increase of 5.8% from the prior-year quarter. COST has a trailing four-quarter earnings surprise of 2.1%, on average.

lululemon athletica LULU currently has an Earnings ESP of +0.19% and a Zacks Rank of 3. The company is likely to register a bottom-line increase when it reports third-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for the quarterly earnings per share of $2.27 suggests a rise from $2.00 reported in the year-ago quarter.

lululemon’s top line is expected to ascend year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.19 billion, which indicates a rise of 17.8% from the figure reported in the prior-year quarter. lululemon has a trailing four-quarter earnings surprise of 6.8%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Dollar General Corporation (DG) : Free Stock Analysis Report

Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report

Costco Wholesale Corporation (COST) : Free Stock Analysis Report

lululemon athletica inc. (LULU) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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