Deutsche Bank Maintains a 'Buy' on Dollar General (DG); Q2 Preview

August 28, 2012 12:14 PM EDT
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Price: $74.33 +1.70%

Rating Summary:
    17 Buy, 16 Hold, 1 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 35 | Down: 31 | New: 11
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Deutsche Bank maintains a 'Buy' on Dollar General (NYSE: DG) price target of $61.00.

Analyst, Charles Grom, said, "We are forecasting 2Q EPS of $0.65 based on SSS of 4.5% and sales growth of 10.5%. Moving down the P&L, on EBIT margins, we expect GPM down 22 bps (capital project costs), w/ SG&A leverage of 21 bps and an 8 bps lift from D&A, resulting in 7 bps of EBIT margin expansion to 9.9%. Note, we are modeling no share repurchases this quarter (or the remainder of 2012)." (DG reports on Sept 5th)

Grom thinks shares of DG are attractive at current levels, citing: 1) same-store sales comparisons have been reset lower after reports from Fred's (Nasdaq: FRED), Dollar Tree (Nasdaq: DLTR) and Family Dollar (NYSE: FDO); 2) Less pressure on margins as of late; and 3) Improved apparel assortment.

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 $48.85 yesterday.

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