Why Is Dollar General (DG) Up 9.6% Since Last Earnings Report?

It has been about a month since the last earnings report for Dollar General (DG). Shares have added about 9.6% in that time frame, outperforming the S&P 500.But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Dollar General due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.Dollar General Beats Q1 Earnings Estimates, Raises FY26 ViewDollar General reported first-quarter fiscal 2026 results, wherein the top line missed the Zacks Consensus Estimate, while the bottom line beat the same. Both net sales and earnings increased year over year, reflecting solid execution of its strategic initiatives, positive customer traffic trends and operating margin expansion, which more than offset the impact of severe winter weather and higher fuel costs. The company witnessed a rise across all major merchandise categories, supported by same-store sales growth and contributions from new stores. Better-than-expected first-quarter bottom-line performance prompted management to lift its fiscal 2026 earnings view.More on DG’s Q1 PerformanceDollar General posted quarterly earnings of $2.00 per share, which surpassed the Zacks Consensus Estimate of $1.89. The bottom line increased 12.4% from $1.78 reported in the year-ago quarter.Net sales of $10,787 million rose 3.4% year over year. Revenues narrowly missed the Zacks Consensus Estimate of $10,822 million. The increase was driven by positive contributions from new stores and growth in same-store sales, partially offset by store closures.Same-store sales improved 2%, reflecting a 1.4% rise in customer traffic and a 0.5% increase in average transaction amount. The quarter marked positive comparable-sales growth across all major categories, including consumables, seasonal, home products and apparel.DG’s Key Metrics & Margin InsightsDollar General’s consumables category generated sales of $8,892.5 million, up 3% from the prior-year quarter. Seasonal sales increased 6% to $1,084.3 million, while home products sales rose 3.1% to $523 million. Apparel sales advanced 6.7% to $287.2 million.Gross margin expanded 65 basis points to 31.6%, benefiting from higher inventory markups, lower shrink and reduced inventory damages, partly offset by increased markdowns and transportation costs.SG&A expenses, as a percentage of sales, deleveraged 25 basis points to 25.7%. The increase mainly stemmed from higher depreciation and amortization expenses, utilities and property taxes, partly offset by lower incentive compensation.Dollar General’s operating profit increased 10.8% to $638.5 million. Operating margin expanded 40 basis points to 5.9%.DG’s Financial SnapshotDollar General ended the quarter with cash and cash equivalents of $1,353.1 million, long-term obligations of $4,563.1 million and total shareholders’ equity of $8,843.3 million.Net cash provided by operating activities was $716.2 million in the first quarter. Capital expenditures totaled $352 million, including $203 million for improvements, upgrades, remodels and relocations of existing stores, $73 million for new-store facilities, $62 million for distribution and transportation-related projects and $12 million for information systems and technology-related projects.DG’s Store UpdatesDuring the quarter, Dollar General opened 190 new stores in the United States and five new stores in Mexico. It remodeled 659 stores through Project Renovate and 711 stores through Project Elevate, while relocating six stores.Management reiterated plans to execute nearly 4,730 real estate projects in fiscal 2026, including about 450 new stores in the United States and 10 new stores in Mexico, nearly 2,000 Project Renovate remodels, approximately 2,250 Project Elevate remodels and about 20 store relocations.What to Expect From DG in Fiscal 2026?Dollar General raised its fiscal 2026 earnings per share guidance to $7.20-$7.45 from the prior view of $7.10-$7.35. The company continues to expect net sales growth of 3.7-4.2% and same-store sales growth of 2.2-2.7% for fiscal 2026. Capital expenditures are still projected in the $1.4-$1.5 billion range.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in fresh estimates.VGM ScoresCurrently, Dollar General has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock has a grade of B on the value side, putting it in the top 40% for value investors.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Dollar General has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerDollar General is part of the Zacks Retail - Discount Stores industry. Over the past month, Target (TGT), a stock from the same industry, has gained 4.4%. The company reported its results for the quarter ended April 2026 more than a month ago.Target reported revenues of $25.44 billion in the last reported quarter, representing a year-over-year change of +6.7%. EPS of $1.71 for the same period compares with $1.30 a year ago.For the current quarter, Target is expected to post earnings of $2.21 per share, indicating a change of +7.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Target. Also, the stock has a VGM Score of A.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks