Dollar General (DG) Stock Forecast & Price Target

Dollar General's strong performance in the second quarter reflects a 5.1% year-over-year revenue growth to $10.73 billion, driven by an increase in comparable store sales of 2.8%. The retailer's strategic partnerships, such as with DoorDash, have contributed to significant sales expansion, with a year-over-year growth of over 60% in orders for more than 17,000 stores, showcasing broad-based gains across various merchandise categories. Additionally, Dollar General benefited from gross margin expansion, which increased by 137 basis points to 31.3%, aided by lower shrink, efficient inventory management, and rising consumer spending across all income demographics.

Dollar General is experiencing significant pressure on its core customer base due to rising gas and food prices, which has historically led to negative sales impacts in previous economic downturns. Additionally, the company faces an estimated $200 million headwind from incentive compensation that could negatively affect earnings per share by approximately $0.69-$0.70 in 2025. Compounding these challenges, the sequential deceleration in comparable sales growth combined with increased competition from larger retailers like Walmart poses further risks to Dollar General's margins and overall financial performance.