According to data compiled by S&P Global Market Intelligence, discount retailer Dollar General‘s (DG -0.33%) share price ballooned by almost 17% across the trading week. In retrospect that wasn’t surprising, as the company simply crushed it in its latest earnings report, and analysts fell over themselves publishing bullish new takes on its stock.
The dollars rolled in
Dollar General delivered its first-quarter figures Tuesday morning, and investors couldn’t wait to pile into its shares.
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This was understandable, because those fundamentals were solid. The retailer’s net sales climbed more than 5% higher year over year to land at $10.4 billion. This was on the back of a 2%-plus rise in same-store sales, always a core performance metric in the retail industry.
Profitability headed north too, with GAAP net income rising almost 8% to slightly under $392 million. In per-share terms, Dollar General earned $1.78.
Both headline figures topped the consensus analyst estimates. On average, pundits tracking the stock were modeling $10.25 billion on the top line, and only $1.46 per share for net income.
Some of those pundits might not be underestimating Dollar General quite so much. A clutch of them raised their price targets on the stock, with a few even upgrading their recommendations.
One of the upgrades was enacted by Oppenheimer‘s Rupesh Parikh, who now feels the company is worthy of an overperform (buy) rating at $130 per share, where previously it was only rated a perform (hold).
Solid and sustainable
According to reports, Parikh was not only impressed by Dollar General’s ability to sustain 2% to 3% comparable sales growth figures, he feels it’s an excellent play in a recessionary environment. That’s been a persistent fear lately of numerous economists and more than a few investors, given the current shakiness in the global and domestic economies.
Dollar General definitely seems as if it’s on a roll, and it might just become a hot, go-to retailer if those gloomy predictions come true. It’s absolutely a stock to consider for our times.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
