DLTR - Dollar General: Blowout Quarter Needed (Rating Downgrade)

2024-03-12 16:29:14 ET

Summary

• Dollar General needs a significant business rebound to match its recent stock rally, but there is no tangible evidence of a turnaround yet.
• The discount retailer plans to open 800 new stores in FY24 despite negative comps and a weak sales growth forecast.
• The stock trades at 21x forward EPS targets, inline with the P/E ratio for a peer with much stronger growth.

Dollar General ( DG ) needs an incredible rebound in the business to match the rebound in the stock already. The discount retailer reported bleak results in 2023 before replacing the CEO. My investment thesis is now Bearish on the stock after the big rally back above $160 in anticipation of a turnaround with no tangible evidence yet....

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