Dollar General (DG) Stock Forecast & Price Target

Dollar General has demonstrated a strong financial performance with a 5.1% year-over-year increase in total sales, reaching $10.73 billion, supported by a comparable store sales growth of 2.8%. The company's sales growth is broad-based across various merchandise categories and consumer demographics, notably benefiting from increased shopping frequency and spending among middle- and higher-income households. Additionally, improved gross margins, driven by a reduction in shrink and higher inventory markups, have solidified a positive outlook for the company's financial trajectory moving forward.

Dollar General's financial outlook is negatively impacted by several macroeconomic pressures that could affect its core customer base, particularly amidst rising gas and food prices, which have historically squeezed consumer spending. Additionally, the company's incentive compensation, estimated to be a $200 million annual headwind, is projected to drag down earnings per share by approximately $0.69 to $0.70 in 2025. Compounding these challenges, the company's recent performance reveals a deceleration in comparable sales growth from 4.8% in 1Q25 to 3.3% in 2Q25, with increasing competition, such as Walmart potentially prioritizing market share over price increases, further threatening Dollar General’s sales and margins.