Dollar General Q3 Earnings on the Horizon: Drivers to Watch

Dollar General Corporation DG is likely to register an increase in the top line when it reports third-quarter fiscal 2024 results on Dec. 5 before the opening bell. The Zacks Consensus Estimate suggests that the company will achieve revenues of $10.14 billion, marking a 4.6% increase compared to the same quarter last year. Despite the expected rise in revenues, Dollar General's bottom line is likely to have faced challenges. The Zacks Consensus Estimate for earnings per share for the third quarter has slid by a penny to 96 cents over the past 30 days. This figure indicates a decline of 23.8% from earnings reported in the year-ago period.Dollar General has a trailing four-quarter earnings surprise of 2.8%, on average. In the last reported quarter, the company’s bottom line missed the Zacks Consensus Estimate by a margin of 5%.See the Zacks Earnings Calendar to stay ahead of market-making news.Factors to Note Ahead of DG’s Q3 EarningsDollar General's strategic focus on expanding its market share, particularly in the consumable product category, highlights its competitive pricing and strong value proposition, which resonate well with budget-conscious consumers. The company's proactive pricing strategies and promotional efforts, alongside the ongoing expansion of private brands, are expected to have a positive impact on its revenue growth.We are optimistic about several key initiatives, including DG Fresh, SKU rationalization, digitization and the expansion of the private fleet, all of which are likely to have driven improvements in same-store sales. Furthermore, the “Back to Basics” initiative, aimed at enhancing store operations and customer service, is anticipated to contribute to same-store sales. We forecast 1% growth in same-store sales for the to-be-reported quarter.Dollar General has been focusing on enhancing its supply chain through initiatives like improving on-time and in-full truck deliveries. The construction of two new permanent distribution centers in Arkansas and Colorado is expected to have optimized logistics, reduce transportation costs and improve efficiency. However, Dollar General faces challenges such as markdown pressures, rising SG&A expenses and potential shifts in consumer spending patterns. These factors highlight the dynamic environment in which the company operates. The company's efforts to reduce shrink, including changes in self-checkout strategies, are expected to yield results. We expect the gross margin to decline by 80 basis points in the third quarter. Furthermore, inflationary pressures on operating costs, including higher wages and logistics expenses, are compressing margins despite efforts to normalize other expenses. We expect SG&A expenses, as a percentage of net sales, to deleverage 50 basis points. As a result, we foresee an operating margin contraction of 120 basis points.Dollar General Corporation Price, Consensus and EPS Surprise Dollar General Corporation price-consensus-eps-surprise-chart | Dollar General Corporation QuoteWhat the Zacks Model Predicts for DGAs investors prepare for Dollar General's third-quarter announcement, the question looms regarding earnings beat or miss. Our proven model does not conclusively predict an earnings beat for Dollar General this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here. Dollar General has a Zacks Rank #3 but an Earnings ESP of -3.93%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Stocks With the Favorable CombinationHere are companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:Chewy CHWY has an Earnings ESP of +2.67% and a Zacks Rank of 2 at present. CHWY’s top line is anticipated to advance year over year when it reports third-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.86 billion, which suggests a 4.5% rise from the figure reported in the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.The company is expected to register an increase in the bottom line. The consensus estimate for Chewy’s third-quarter earnings is pegged at 23 cents per share, up 53.3% from the year-ago quarter. CHWY has a trailing four-quarter earnings surprise of 50.9%, on average.Casey's General Stores CASY currently has an Earnings ESP of +1.50% and a Zacks Rank of 3. The company is likely to register a decrease in the bottom line when it reports second-quarter fiscal 2025 numbers. The Zacks Consensus Estimate for the quarterly earnings per share is pegged at $4.24, flat year over year. Casey's top line is expected to decline year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $4.01 billion, which suggests a fall of 1.4% from the prior-year quarter. CASY has a trailing four-quarter earnings surprise of 15.8%, on average.Five Below FIVE has an Earnings ESP of +10.17% and currently carries a Zacks Rank of 3. FIVE’s top line is anticipated to advance year over year when it reports third-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $800.6 million, which suggests an 8.7% rise from the figure reported in the year-ago quarter. The company is expected to register a decline in the bottom line. The consensus estimate for Five Below’s third-quarter earnings is pegged at 16 cents a share, down 38.5% from the year-ago quarter. FIVE has a trailing four-quarter earnings surprise of 1.6%, on average.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Dollar General Corporation (DG): Free Stock Analysis Report Casey's General Stores, Inc. (CASY): Free Stock Analysis Report Five Below, Inc. (FIVE): Free Stock Analysis Report Chewy (CHWY): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks