Nomura Securities Maintains a 'Neutral' on Dollar General (DG); Q2 Review

Nomura Securities maintains a 'Neutral' on Dollar General (NYSE: DG), raises price target from $34 to $38.

Nomura analyst, Aram Rubinson, said, "DG continues to drive sales higher using a larger consumables assortment and discretion with respect to price increases. Q2 results suggest it has struck a successful balance between sales and margins. Moreover, the leverage this provided over fixed costs made DG’s last quarter a stellar example of the retail productivity loop at work. Our 2011 estimate is $0.07 higher, at $2.30. This reflects Q2 upside and minor tweaks to our 2H projections plus the higher LIFO charges. Our 2012 estimate is $0.08 higher at $2.60, reflecting a higher current year base. We raised our price target to $38 from $34, reflecting a 7.5x multiple applied to a $2.0B average EBITDA estimate for 2012 & 2013."

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 $36.60 yesterday.

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