Dollar General (DG – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Kelly Bania from BMO Capital maintained a Hold rating on the stock and has a $80.00 price target.
Kelly Bania has given his Hold rating due to a combination of factors related to Dollar General’s financial outlook and strategic initiatives. While the company’s guidance for fiscal year 2025 and preliminary estimates for 2026 appear sufficient to support the stock in the short term, Bania expresses skepticism about Dollar General’s ambitious long-term financial goals. The company’s target to achieve 6-7% EBIT margins by 2028/2029, along with double-digit annual EPS growth by 2026, is seen as optimistic, particularly given the heavy reliance on the adoption of DG Delivery and significant contributions from Retail Media.
Bania highlights that while some margin recovery from shrinkage and damages is expected, the anticipated contribution from Retail Media is viewed as highly optimistic. Additionally, the expansion of DG Delivery to 50% of locations by the end of the year raises concerns about potential cannibalization of existing sales. With 2025 being another investment-heavy year, there is caution about returning to a 10%+ EPS growth algorithm. Furthermore, despite Dollar General’s progress in digital offerings compared to competitors, the overall competitive landscape presents challenges that may hinder achieving the projected financial targets.
Bania covers the Consumer Defensive sector, focusing on stocks such as Sysco, Performance Food Group, and Kroger Company. According to TipRanks, Bania has an average return of 6.2% and a 63.97% success rate on recommended stocks.
In another report released today, Piper Sandler also maintained a Hold rating on the stock with a $81.00 price target.