UBS Reiterated Buy on Dollar General (DG) Following 2Q15

UBS reiterated a Buy rating and $85.00 price target on Dollar General (NYSE: DG) following the company's 2Q15 earnings report. For the second quarter in a row, DG achieved a YoY GM gain with a 35 bps increase. DG announced a new prototype that will be launched for store openings, relocations, and remodels in 2016. It noted that these locations have faster, more convenient checkout.

Analyst Michael Lasser commented, "In our view, not much has changed with DG's investment case. We still think it's attractive. If anything, expectations have now been recalibrated lower and the back half guidance seems quite achievable. While its 2Q comp of 2.8% was a tad softer than 3-4% expectations due to a lull in June, this was not that different from many other retailers. Its labor and inventory initiatives should start to help in the intermediate-term. The stores in the first phase of the rollout have already seen better sales. The impact should accelerate towards 2016 as more of its locations are touched by the investments. From here, even if the company's algorithm rests on a longer-term comp that hovers around the 3% range, we think it can still produce mid-teens EPS growth with optionality to the upside. We would use the pullback as an opportunity."

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 $74.27 yesterday.

You May Also Be Interested In

• CIMC Enric Holdings Ltd. (3899:HK) (CIMEF) PT Lowered to HK$8.70 at HSBC
• Benchmark on Take-Two's (TTWO) GTV 6 Release: 'we anticipate that the game will not be released within the fiscal year and expect it to launch in fiscal 2026 instead'
• TD Cowen Reiterates Buy Rating on Constellation Brands (STZ)