Dollar General (DG) Stock Forecast & Price Target

Dollar General has raised its sales guidance for 2025, driven by improved margin performance and a notable 60% year-over-year growth in sales through its DoorDash partnership, which is now active in over 17,000 stores. In the second quarter, the retailer reported a 5.1% year-over-year revenue growth reaching $10.73 billion, supported by a 2.8% increase in comparable store sales and broad-based gains across merchandise categories and customer segments. Additionally, the company has boosted its earnings per share (EPS) target by approximately 10%, reflecting strong performance among middle and higher-income consumers, which has contributed to its competitive position in the market.

Dollar General faces a negative outlook due to projected operating margin compression, forecasted at 20 basis points to 3.0%, alongside an estimated annual headwind of approximately $200 million in incentive compensation, which translates to a drag of around $0.69-$0.70 on 2025 EPS. Additionally, pressures from rising gas and food prices may further squeeze the retailer's core customer base, leading to lower sales and potential negative mix shifts toward lower-margin consumables. Competitive threats from larger retailers, such as Walmart, could exacerbate this situation by prioritizing market share over pricing strategies, ultimately impacting Dollar General's sales and margins.