Stifel Raises Price Target on Dollar General (DG) Following Investor Day

Stifel reiterated a Buy rating on Dollar General (NYSE: DG), and raised the price target to $100.00 (from $90.00), following the company's investor day. Nearly every part of the business is making smart incremental steps to drive EBIT growth, and the white space opportunity is only getting bigger. DG now sees opportunity for an additional 13,000 dollar stores in the U.S., or more than 40,000 total dollar store locations.

Analyst Taylor LaBarr commented, "On Thursday 3/24 we attended DG’s Investor Day presentations and store tour in Nashville, TN. We came away with an even greater appreciation for a company firing on all cylinders. DG will accelerate growth in FY16 and FY17 in a land-grab that takes advantage of two distracted competitors (DLTR integrating FDO and WMT closing its Express format as it takes on Amazon), but it’s operational refinements are even more impressive. Management is attacking shrink, store manager training and turnover (and district manager efficiency), merchandising productivity, supply chain efficiency. Nearly every part of the business is making smart incremental steps to drive EBIT growth, and the white space opportunity is only getting bigger. Our updated DTBO analysis now suggests a middle “base case” valuation of roughly $102 and a weighted average of bullish, bearish and base-case scenario of roughly $105. These readings are in line with our new $100 price target (high on the Street), representing 11.6x EV/EBITDA on our FY17 estimates, representing a 38% premium to the discount & food retail sectors, but in line with best-in-class retail operators and growth stories (COST at 11.6x, SFM at 11.6x, and FIVE at 12.2x)."

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 $83.95 yesterday.

You May Also Be Interested In

• Citi Upgrades United Microelectronics Corp (2303:TT) (UMC) to Buy 'with limited downside'
• HSBC Downgrades Anglo American Platinum Limited (AMS:SJ) (ANGPY) to Reduce
• Prudential Financial (PRU) PT Raised to $116 at Evercore ISI