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Dollar General (DG) Gears Up for Q3 Earnings: What to Expect

Dollar General Corporation DG is likely to register an increase in the top line when it reports third-quarter fiscal 2022 results on Dec 1, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $9.43 billion, indicating an improvement of 10.7% from the prior-year quarter’s level.

The bottom line of this discount retailer is also expected to have increased from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for third-quarter earnings per share has risen by a penny to $2.55 over the past 30 days, suggesting an increase of 22.6% from the year-ago period’s reported number.

Dollar General has a trailing four-quarter earnings surprise of 2.2% on average. In the last reported quarter, this Goodlettsville, TN-based player beat the Zacks Consensus Estimate by 1.7%.

Key Factors to Note

Dollar General’s better pricing, private-label offerings and effective inventory management are likely to have contributed to the to-be-reported quarter’s top line. The company’s operational capabilities, coupled with its real estate growth strategy, position it well to gain market share by targeting low-to-middle-income-group consumers. It has also been focusing on consumable and non-consumable categories to boost traffic.

To make shopping convenient and contactless, Dollar General has partnered with DoorDash, the last-mile logistics platform, to offer same-day delivery of essential household items. The company has been steadily expanding its self-checkout facility.

We remain encouraged by the company’s host of initiatives, such as DG Fresh, Fast Track, digitization and private fleet, which are likely to have contributed to same-store sales growth and margin expansion. We anticipate same-store sales to have increased 5% in the third quarter.

However, margins remain an area to watch. Product cost inflation, higher labor costs, supply-chain issues and seasonal markdowns are likely to have weighed on margins.

Dollar General Corporation Price, Consensus and EPS Surprise

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

What the Zacks Model Unveils

Our proven model predicts 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 chances of an earnings beat, which is the case here.

Dollar General has an Earnings ESP of +1.58% and carries a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With Favorable Combinations

Here are three 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 this season:

Five Below FIVE currently has an Earnings ESP of +10.31% and a Zacks Rank of 3. The company is likely to register a decline in the bottom line when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of 14 cents suggests a decline of 67.4% from the year-ago quarter.

Five Below’s top line is expected to have increased marginally year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $611.2 million, which suggests a rise of 0.6% from the figure reported in the prior-year quarter. In the trailing four quarters, FIVE delivered an earnings beat of 11.6% on average.

Kroger KR currently has an Earnings ESP of +1.95% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of 80 cents suggests an increase of 2.6% from the year-ago quarter.

Kroger’s top line is expected to have risen year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $34 billion, which suggests a rise of 6.7% from the figure reported in the prior-year quarter. KR delivered an earnings beat of 15.7%, on average, in the trailing four quarters.

Casey's General Stores CASY currently has an Earnings ESP of +12.58% and a Zacks Rank #3. The company is expected to register a bottom-line increase when it reports second-quarter fiscal 2023 results. The Zacks Consensus Estimate for quarterly earnings per share of $3.10 suggests an increase of 19.7% from the year-ago quarter.

Casey's General’s top line is anticipated to have risen year over year. The consensus mark for CASY’s revenues is pegged at $4.16 billion, indicating an increase of 27.5% from the figure reported in the year-ago quarter. Casey's General has a trailing four-quarter earnings surprise of 1.3% on average.

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

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