Dollar General (DG) Stock Forecast & Price Target

Dollar General has demonstrated strong financial performance, reporting a 4.6% year-over-year increase in total sales, reaching $10.7 billion in Q3, with comparable store sales growth of 2.5% that exceeded market expectations. The company also achieved an operating margin expansion of 82 basis points to 4.0%, supported by a 107 basis point increase in gross margin to 29.9%, largely driven by reduced shrink and higher markups. Additionally, significant growth in EBIT dollars was noted, rising 31.5% to $426 million, further indicating robust operational efficiency and demand for Dollar General's diverse product offerings.

Dollar General has experienced a decrease in its SG&A expense ratio, increasing to 25.9% due to higher incentive compensation and maintenance costs, which could pressure margins moving forward. The company faces significant risks from fluctuating commodity costs, rising interest rates, and weakened consumer confidence, particularly among its primary customer base of lower- and middle-income households. Additionally, increased competition and ongoing macroeconomic challenges, such as tariffs and inflation, further contribute to concerns regarding the sustainability of its sales growth and profitability.