Barclays Maintains an 'Overweight' on Dollar General (DG); Accumulate Shares Ahead of Q1 Report

June 1, 2012 1:29 PM EDT
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Price: $73.09 --0%

Rating Summary:
    17 Buy, 16 Hold, 1 Sell

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Barclays maintains an 'Overweight' on Dollar General (NYSE: DG) price target of $52.00.

Analyst, Meredith Adler, said, "We are rasing our 1Q EPS by $0.01 to $0.60 to reflect the $300 million of share repurchases completed in 1Q and putting us in line with consensus. Our forecast is based on total sales of $3.8 billion, up 11.0%, driven by comps of 5.5%. We expect the gross margin to decline by 25 bp and SG&A dollars to grow by 10.0%." (Barclays boosts FY13 EPS estimate from $2.76 to $2.79 and FY14 from $3.27 to $3.30)

Adler suggests accumulating shares of DG, saying a positive Q1 report will offer investors stability in an uncertain macro environment along with knowledge that DG is positioned to capitalize. Other highlighted points include strong free cash flow, leverage on fixed costs and ability to continue expanding.

NOTE - DG to report Q1 after the close on June 4, 2012

For an analyst ratings summary and ratings history on Dollar General click here. For more ratings news on Dollar General click here.

Shares of Dollar General closed at $48.91 yesterday.

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