Earnings preview: What to expect when Dollar General reports Q1 2019 earnings results

Dollar General Corporation (NYSE: DG) is scheduled to report first quarter 2019 earnings results on Thursday, May 30, before market open. Earnings are projected to increase 2% to $1.39 per share while revenue is estimated to grow over 7% to $6.5 billion. Looking at the trailing four quarters, the company has a poor track record of beating earnings estimates.

The company’s effective management of its business operations is likely to drive top line growth in the first quarter. Positive trends in average transaction and customer traffic should benefit same-store sales.  

Dollar General has been investing significantly to improve its assortment and consumer convenience as well as in its technological capabilities. Last quarter, the company introduced two new initiatives DG Fresh and Fast Track, and updates on their progress will be worth watching.

These investments can prove lucrative over the longer term but in the short term, they are likely to result in higher expenses and weigh on profitability. The ongoing trade tensions between the US and China and the resultant tariffs might also negatively impact the company.

In the fourth quarter of 2018, Dollar General missed earnings expectations while sales matched projections. Net sales grew 8.5% to $6.6 billion while adjusted EPS rose 24% to $1.84. Same-store sales increased 4%, helped by growth in average transaction and customer traffic.

For fiscal 2019, the retailer expects net sales growth of about 7% on a 2.5% growth in same-store sales. Diluted EPS for this period is projected in the range of $6.30 to $6.50.

Dollar General’s stock has gained over 13% so far this year. Over the past 52 weeks, the stock has climbed over 26%.

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