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Barclays Maintains an 'Overweight' on Dollar General (DG); 3Q10 Earnings Preview

December 2, 2010 3:44 PM EST Send to a Friend
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Price: $64.20 +0.78%

Rating Summary:
    14 Buy, 9 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 6 | Down: 14 | New: 24
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Barclays maintains an 'Overweight' on Dollar General (NYSE: DG), PT $34.

Barclays analyst says, We are forecasting 3Q EPS of $0.36, above consensus of $0.35. Our EPS forecast is based on total sales of $3.2 billion, up 10.5% on comps of 5.0%."

"DG has had a very strong run in the past few weeks, rising 15.4% since November 5 vs. the S&P 500 -1.6%, after being a laggard for much of the year. The recent move is probably tied to the strong results reported by DLTR. Based on our estimates, DG is now trading at a multiple that is close to its peers. We believe DG continues to capitalize on industry strength given the weak economy and its emphasis on consumables. Sales trends improved at the end of 2Q10 and this continued into the beginning of 3Q10. Management's introduction of more discretionary merchandise this fall adds a little more risk to the story, but discretionary is a relatively small part of total sales so the risk is modest. We see the stock moving higher if strong 3Q results lead to higher earnings estimates for 2011, if the market grants the entire group a "growth" multiple, and if the float in the stock goes up."

For more ratings news on Dollar General click here and for the rating history of Dollar General click here.

Shares of Dollar General closed at $32.31 yesterday.




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