Dollar General (DG) Stock Forecast & Price Target

Dollar General's sales rose by 4.5% to $10.3 billion, driven by a 1.2% increase in comparable store sales, reflecting positive performance amidst expanding penetration into middle and upper-income consumer segments. The retailer has also seen an uptick in upper-income customers transitioning to its stores, contributing to stable sales trends. Additionally, the company's strategic partnership with DoorDash to enhance same-day delivery capabilities further supports its revenue potential, alongside a focused strategy to improve profitability by concentrating on existing stores rather than new ones.

Dollar General's 2025 guidance presents a mixed outlook, featuring lower-than-expected EPS estimates of $5.10-$5.80, alongside sluggish comp growth and uncertainty regarding the projection of 10% EPS growth by 2026, particularly under the pressure of tariffs affecting its lower-income customer base. The retailer anticipates a decline in gross margin to 24.9%, driven by increased markdowns, inventory damages, and rising distribution costs, with additional pressures from real estate projects and store closures in the first half of the year. Furthermore, the long-term operating margin guidance of only 6%-7% for 2028-2029 reflects a significant decline from previous years and suggests ongoing challenges in managing labor costs and operating expenses in relation to sales growth.