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Factors Setting the Tone for Dollar General (DG) Q4 Earnings


Dollar General Corporation DG is scheduled to report fourth-quarter fiscal 2017 results on Mar 15. In the preceding quarter, the company delivered a positive earnings surprise of 4.3%. Also, the company’s earnings have surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average of 3.7%.

Let’s see how things are shaping up prior to this announcement.

What to Expect?

The Zacks Consensus Estimate for the quarter is pegged at $1.48 per share, down nearly 0.7% year over year. However, analysts polled by Zacks anticipate revenues of $6,220 million, up roughly 3.5% from the year-ago quarter. Well the obvious question that comes to mind is whether Dollar General will be able to pull off positive earnings surprise in the quarter under review.

Given this backdrop, let’s delve deeper to find out the factors likely to have a bearing on the company’s fourth-quarter results.

Factors at Play

In the fourth quarter of fiscal 2017, Dollar General results are likely to be driven by store expansion and robust performance of Consumables category. Earlier, the company had completed the buyout of 285 Acquired Stores, which is expected to impact fiscal 2017 results. Including the impact from the aforementioned buyout, management now anticipates net sales to rise by 7% compared with 5-7% projected earlier. Additionally, Dollar General is accelerating the pace of new store openings.

Meanwhile, the company’s commitment toward better price management, cost containment, private label offering, effective inventory management, merchandise and operational initiatives is impressive. Moreover, in order to increase traffic, Dollar General is focusing on both consumables and discretionary items.

Analyst surveyed by the Zacks expects sales in the Consumables category to be $4,720 million, up 4.8% year over year. However, Home products sales are projected to be $381 million, down nearly 6% year over year. Apparel and Seasonal category sales are projected to be $300 million and $739 million, up 0.7% and down 7.7%, respectively.

Dollar General Corporation Price, Consensus and EPS Surprise

What the Zacks Model Unveils

Our proven model shows that Dollar General is likely to beat estimates this quarter as the stock has the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen.

Dollar General has an Earnings ESP of +1.69% and a Zacks Rank #2. This makes us reasonably confident that the bottom line is likely to outperform estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With Favorable Combination

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

The Children's Place, Inc. PLCE has an Earnings ESP of +0.40% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Hibbett Sports, Inc. HIBB has an Earnings ESP of +8.62% and a Zacks Rank #3.

Lululemon Athletica Inc. LULU has an Earnings ESP of +1.30% and a Zacks Rank of 3.

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