Dollar General (DG) Stock Forecast & Price Target

Dollar General has raised its sales guidance for 2025, citing improved margin performance during the second quarter, with same-store sales expected to increase by approximately 2.4%. In the latest quarter, the company reported a total revenue growth of 5.1% year-over-year, reaching $10.73 billion, while same-store sales rose by 2.8%, surpassing market expectations. Additionally, there was broad-based sales growth across all income groups, particularly from middle- and higher-income households, contributing to an expansion in gross margin by 137 basis points to 31.3%, driven by lower shrink and increased inventory markups.

Dollar General's stock faces significant headwinds due to a projected annual incentive compensation impact of approximately $200 million, potentially dragging down earnings per share by $0.69 to $0.70 in 2025. Additionally, the company has experienced a deceleration in comp sales growth, dropping from 4.8% in 1Q25 to 3.3% in 2Q25, indicating weakening consumer demand. Macro economic pressures, including rising gas and food prices, coupled with competitive dynamics from larger retailers like Walmart, could further strain the company's core customer base and negatively affect sales and profit margins.