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Dollar General Up after Moody's Revises Outlook to Positive

Shares of Dollar General CorporationDG gained 2% yesterday, after Moody's Investors Service upgraded the company's outlook to positive. Also, Moody's has given a Baa3 grade to the company's recently priced offering of $500 million Senior Notes bearing a rate of 4.150%, which will mature in 2025.

We believe that the company's commitment toward better price management, cost containment, private label offering, effective inventory management, merchandise and operational initiatives would drive sales and margin trends. Moreover, in order to increase traffic, Dollar General is focusing on both consumables and discretionary categories.

Dollar General has displayed a fabulous comparable-store sales (comps) growth story. The company's comps remained robust despite unfavorable macroeconomic conditions mainly due to competitive pricing and strategic store expansion plans, including remodeling and relocations. Fiscal 2014 represented the 25th consecutive year of comps growth.

Recently, the company announced its decision to lay off 255 employees, out of which 115 are vacant. Notably, Dollar General stated that jobs at its stores will not be affected. The company further added that it has been evaluating its cost structure for some time now and is trying to improve its financial flexibility to attend long-term growth.

In fiscal 2016, Dollar General intends to continue with its cost-control and reduction initiatives by employing a more effective budgeting process.

Zacks Rank

Dollar General currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in this sector include Big Lots Inc. BIG , Burlington Stores, Inc. BURL and Target Corp. TGT . All these stocks have a Zacks Rank #2 (Buy).

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DOLLAR GENERAL (DG): 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.


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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