Dollar General Beats Q4 Estimates, Issues Strong FY 2020 View

Dollar General Beats Q4 Estimates, Issues Strong FY 2020 View
March 13, 2020

 

Dollar General Corporation (NYSE: DG) reported fiscal 2019 fourth-quarter results that surpassed analysts’ estimates. The variety store chain posted Q4 earnings that improved from last year. The company also issued impressive FY 2020 sales and EPS growth outlook, in addition to strong Comp sales view. Despite the announcement of strong quarterly results, the stock lost 9.93% or $15.66 to close at $141.97.

The Goodlettsville, Tennessee-based company posted fourth-quarter revenues of $7.157 billion, an increase of 7.70% from $6.649 billion in the comparable quarter last year.

For the quarter ended January 31st, 2020, the company reported Q4 2019 profit of $535.44 million, or $2.10 per share, compared with $483.24 million, or $1.84 a share, in the prior-year period. Analysts had anticipated the company to post earnings of $2.01 per share on revenues of $7.15 billion, as per a survey of analysts conducted by Thomson Reuters.

During the recent quarter, Comp sales increased 3.2%, beating FactSet Consensus that called for Same-store sales of 2.8%. Operating profit rose 12.9% to $720.90 million.

Commenting on the quarterly results, CEO Todd Vasos said, “Our full-year results were highlighted by double-digit diluted EPS growth, as well as our 30 consecutive years of same-store sales growth. During the fourth quarter, we delivered a healthy 3.2% increase in same-store sales, as well as strong margin performance.”

Going forward, for FY 2020, the company anticipates net sales growth of 7.5% to 8%, Comp sales growth of 2.5% to 3%, and earnings per share growth of roughly 11.5% on a y-o-y basis. The company has pointed out that the EPS growth outlook has taken the earlier implemented tariff rates into account on some of the goods bought from China.

Analysts at FactSet anticipate Dollar General to post sales of $28.89 billion, reflecting a growth of 7.70%, Comp sales growth of 3% and EPS of $7.43, mirroring 11.8% growth.

The company’s Board declared a quarterly cash dividend of $0.36 a share, an increase of 12.5% over the prior-quarterly dividend. The dividend will be paid on or before April 21st, 2020.

Gross profit percentage rose marginally to 31.8% in Q4 2019, from 31.2% last year. Similarly, the effective income tax rate increased to 23% in the fourth quarter, from 21.2% in the earlier period.

In fiscal 2019, the company repurchased $1.20 billion worth stock, or 8.30 million shares, under the share repurchase program. At the end of fiscal 2019, the remaining authorization for future share repurchases stood at $1.10 billion. The company also reaffirmed its intention to execute roughly 2,600 real-estate projects in FY 2020, including re-modeling of 1,500 stores, the opening of 1,000 stores, and relocation of 80 stores.

The stock is expected to remain range-bound with slight bearish bias mainly due to coronavirus issue. Fundamentally, the stock is strong and can rebound at any time.

The historical price chart indicates that the stock closed below its 50-day moving average. The stock is also facing huge resistance at 157. Additionally, the stochastic oscillator is also making new lower highs. Therefore, we are anticipating the stock to remain bearish in the short-term.

dg - technical analysis - 13th March 2020

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.

Ian Maguire

Ian Maguire

Ian is our resident contributor to the latest going ons in the cryptomarket, keeping up to date with the latest icos and coins


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