What Happened?
Shares of discount retailer Dollar General (NYSE: DG) jumped 13% in the morning session after the company reported impressive first-quarter 2025 results, which blew past analysts' sales, operating profit, and EPS expectations. What really made the difference was people spending more during each visit, which pushed sales up and helped make up for the modest decline in traffic. Guidance was also encouraging. Revenue projections for the full year edged higher, and the EPS range saw a slight lift at the low end. However, management also expressed concern over tariff-driven cost increases and their potential impact on consumer spending. Still, we think this was a solid quarter with some key areas of upside.
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What The Market Is Telling Us
Dollar General’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Dollar General and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 29.7% on the news that the company reported weak second-quarter 2024 results. Its full-year earnings forecast significantly missed analysts' expectations. Management highlighted concerns similar to some of the retailers that reported this quarter. The company called out softer sales trends as customers felt financially constrained, In addition, revenue and EPS fell short of Wall Street's estimates during the quarter. Overall, this was a weaker quarter.
Dollar General is up 44.3% since the beginning of the year, but at $109.12 per share, it is still trading 21.8% below its 52-week high of $139.56 from June 2024. Investors who bought $1,000 worth of Dollar General’s shares 5 years ago would now be looking at an investment worth $575.10.
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