Should You Buy or Hold Dollar General Ahead of Q4 Earnings Report?

As Dollar General Corporation DG prepares to release its fourth-quarter fiscal 2025 earnings results on March 12, before the opening bell, investors will be closely watching customer traffic, same-store sales trends and margins.

DG is likely to witness growth in the top line but a decline in the bottom line. The Zacks Consensus Estimate for revenues stands at $10.78 billion, suggesting a 4.7% increase from the same quarter last year. While the consensus estimate for earnings has risen by 4 cents over the past 30 days to $1.61 per share, it still indicates a 4.2% decline compared with the year-ago period.

Dollar General has a trailing four-quarter earnings surprise of 22.9%, on average. In the last reported quarter, the company’s bottom line beat the Zacks Consensus Estimate by a margin of 39.1%.

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What the Zacks Model Predicts for DG

As investors prepare for Dollar General's fourth-quarter announcement, the question looms regarding earnings beat or miss. Our proven model predicts that an earnings beat is likely for Dollar General this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General has an Earnings ESP of +5.38% and carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dollar General Corporation Price, Consensus and EPS Surprise

Dollar General Corporation price-consensus-eps-surprise-chart | Dollar General Corporation Quote

Factors to Note Ahead of DG’s Q4 Earnings

Dollar General’s fourth-quarter performance is likely to have been supported by the continued strength of its value-focused retail model, as economically pressured consumers increasingly gravitated toward discount retailers. The company’s everyday low-price positioning and strong assortment of affordable items are likely to have resonated with budget-conscious shoppers. Management’s emphasis on maintaining a compelling price gap strengthens Dollar General’s value perception and drives store traffic. These dynamics are likely to have helped sustain customer engagement during the quarter, particularly among lower and middle-income households seeking convenient and affordable shopping options.

This momentum is further bolstered by the company's ability to gain market share in both consumable and non-consumable categories. Dollar General has seen positive sales momentum across key product segments, including consumables, seasonal merchandise, home products and apparel, reflecting balanced demand across essential and discretionary categories. The company’s strategy to enhance assortment, strengthen private brands and improve category execution appears to be resonating with customers. These initiatives, along with a more compelling seasonal offering and improved merchandising displays, are likely to have supported traffic and same-store sales growth during the quarter. We expect same-store sales to increase 2.8% in the fourth quarter.

Dollar General’s ongoing store expansion and remodeling initiatives, coupled with investments in digital capabilities, are also likely to have played a crucial role. DG continues to open new stores and invest in remodel programs such as Project Renovate and Project Elevate. These initiatives are aimed at refreshing existing locations, optimizing merchandising layouts and enhancing the in-store shopping experience, while also improving productivity across mature stores.

At the same time, Dollar General is advancing its retail strategy by expanding myDG Delivery to improve shopping speed. The same-day delivery service, available through the DG app and website, leverages the company’s broad store network to provide faster access to everyday essentials, particularly in rural communities where retail options have been limited. This convenience-driven push is further supported by partnerships with DoorDash and Uber Eats.

On the flip side, fourth-quarter profitability may have remained under pressure from a still-stretched consumer backdrop and ongoing cost headwinds. Core customers continue to shop carefully, often purchasing fewer items per trip. This behavior can limit basket growth. At the same time, higher expenses tied to store operations, maintenance and utilities may have weighed on margins. As a result, even if top-line trends remained constructive, a cautious consumer environment and elevated operating costs could have constrained earnings performance in the quarter.

Dollar General Stock Price Performance

Shares of Dollar General have rallied 85% in the past year compared with the industry’s rise of 21.5%. DG has outpaced key competitors, including Target Corporation TGT, Costco Wholesale Corporation COST and Dollar Tree, Inc. DLTR. While shares of Dollar Tree have surged 76.3%, those of Costco and Target have gained 8% and 6.6%, respectively, during the same period.

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Does DG Present a Strong Case for Value Investing?

Dollar General is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 20.17. This valuation reflects a discount compared to the industry’s average of 33.31 and the S&P 500's P/E of 21.84. However, the stock appears overvalued compared to its median P/E level of 17.61, observed over the past year.

Dollar General is trading at a premium to Target (with a forward 12-month P/E ratio of 15.01) and Dollar Tree (17.09) but at a discount to Costco (47.18).

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Should You Buy or Hold DG Stock?

Dollar General appears well-positioned to deliver steady sales momentum supported by its strong value proposition, expanding store footprint and growing digital convenience initiatives. However, lingering margin pressures and cautious consumer spending could temper earnings growth. Given the stock’s strong run over the past year and a balanced mix of supportive fundamentals and potential headwinds, investors may prefer to adopt a wait-and-see approach ahead of the earnings release. Existing shareholders could consider holding their positions to benefit from the company’s long-term growth strategy, while prospective investors may look for greater clarity from the upcoming results and management commentary before initiating new positions.

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This article originally published on Zacks Investment Research (zacks.com).

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