Dollar General (DG) Stock Forecast & Price Target

Dollar General has demonstrated strong financial performance, reporting a 4.6% year-over-year revenue growth to $10.7 billion for Q3, with comp store sales increasing by 2.5%, slightly surpassing market expectations. The company's operating margin expanded by 82 basis points to 4.0%, reflecting gross margin improvements driven by lower shrinkage and higher markups, which contributed to a significant 31.5% increase in EBIT dollars to $426 million. Additionally, Dollar General's continued success in its Popshelf stores indicates effective consumer engagement and enhanced product offerings, further strengthening its market position.

Dollar General's SG&A expense ratio increased to 25.9%, driven by higher incentive compensation, repairs and maintenance costs, and utilities, indicating a strain on profitability. The company's consumer base, primarily lower- and middle-income households, continues to feel financial pressures, leading to trade-offs in spending behavior. Additionally, ongoing macroeconomic risks, including rising interest rates, inflation, and increased competition, contribute to an uncertain outlook for the retailer's future performance.