Dollar General Corporation DG, one of the largest discount retailers in the U.S., is slated to report first-quarter fiscal 2015 results on Jun 2, before the opening bell. Let’s see how things are shaping up for this announcement.
Factors at Play This Quarter
Dollar General posted in-line earnings in the last quarter. In its fiscal 2015 guidance, the company hinted that the West Coast port disruption will have a negative impact on its first-quarter fiscal 2015 earnings per share. Additionally, we remain concerned about the increasing gross margin pressure due to rise in sales of low margin carrying products.
However, despite the above odds, the company’s commitment toward better price management, cost containment, private label offering, effective inventory management, merchandise and operational initiatives cannot be ignored.
Earnings Whispers
Our proven model does not conclusively show that Dollar General is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Dollar General is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 82 cents.
Zacks Rank: Dollar General carries a Zacks Rank #2 (Buy). Though a Zacks Rank #2 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Casey’s General Stores, Inc. CASY has an Earnings ESP of +14.29% and a Zacks Rank #1 (Strong Buy).
Genesco Inc. GCO has an Earnings ESP of +2.94% and a Zacks Rank #2.
Burlington Stores, Inc. BURL has an Earnings ESP of +5.00% and a Zacks Rank #3 (Hold).
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