Dollar General (DG) Stock Forecast & Price Target

Dollar General, the largest dollar store operator in the U.S. with over 20,000 locations, reported fiscal 2024 sales of $40 billion, reflecting a robust business model focused on rural and low-income markets. In Q3, the company achieved a 4.6% increase in total sales to $10.7 billion, complemented by a comparable store sales growth of 2.5%, which exceeded market expectations. Moreover, the operating margin expanded by 82 basis points to 4.0%, alongside a significant 31.5% increase in EBIT dollars to $426 million, indicating a strong financial trajectory bolstered by gross margin improvements and an effective product assortment.

Dollar General's SG&A expense ratio has deleveraged less than anticipated, rising 25 basis points to 25.9%, largely due to increased costs in incentive compensation and utilities. The firm faces several risks, including volatility in commodity costs, rising interest rates, and weaker consumer confidence, particularly among its core lower-income demographics. Additionally, heightened competition and macroeconomic factors, such as inflation and tariffs, contribute to an overall negative outlook for the company's stock performance.