Dollar General Corp. (NYSE:DG) EPS Beats Expectations, Outlook Upbeat

Dollar General Corp. (NYSE:DG)

Dollar General Corp. (NYSE:DG) announced fourth quarter earnings that came in above the Street analysts’ expectations by four cents a share. However, top line growth of 7.09% was lower than the Street estimations of 7.3% though same store sales advanced 2.2% in the same period. The retailer also announced an upbeat forecast for the next fiscal year thus boosting the stock price by over 8% today.

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4Q Results

Dollar General Corp. (NYSE:DG) reported net income of $376 million or $1.30 a share for the fourth quarter. In comparison, year-ago net income was $355 million or $1.17 a share. The latest quarter results represented net income and EPS growth of 5.9% and 11.1% respectively. Street analysts estimated the retailer to earn $1.30 a share for the fourth quarter.

The company’s top line advanced 7.09% to $5.29 billion from $4.94 billion in the previous year quarter. Street analysts predicted the retailer to deliver revenue of $5.30 billion or 7.3% growth. Its same-store sales advanced 2.2% driven by growth in average transaction amount as well as customer traffic.

Tobacco, food, perishables, snacks and candy were some of the items that generated YoY increases in the fourth quarter. Dollar General’s gross margin improved by twelve basis points to 31.8% fueled by lower costs for transportation and enhanced inventory shrinkage rate. There was no change in the data on selling, general and administrative expenses as a percentage of sales in the comparable period.

Outlook For Fiscal 2017

The retailer announced its outlook for the fiscal year 2017 projecting net sales of 7 – 10% growth. That will be driven by same-store sales growth of 2 – 4% and by adding 6 – 8% square footage in the forecast period. Wall Street analysts are expecting top line growth of 8.1%.

Dollar General also expects its earnings to advance 10% to 15% in fiscal year 2017. That means it would deliver EPS of approximately $4.36 – $4.56. The retailer said that it would return 11 – 17% through dividend and earnings growth. The company expects its operating profit to grow between 7% and 11%.

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