Dollar General’s Temporary Gains Amid Long-term Challenges: A Hold Rating Analysis

Paul Lejuez, an analyst from Citi, maintained the Hold rating on Dollar General (DG – Research Report). The associated price target was raised to $112.00.

Paul Lejuez has given his Hold rating due to a combination of factors impacting Dollar General’s performance. The company experienced a benefit from reduced shrinkage in the first quarter, which contributed to earnings surpassing expectations. However, this shrink benefit is seen as a temporary advantage rather than a long-term solution to the company’s challenges.
Despite Dollar General’s efforts to capture market share from traditional grocery and drug stores and its penetration into higher-income consumer segments, there are concerns about its ability to compete with larger retailers like Walmart in delivering value and convenience. Additionally, the stock’s current valuation appears balanced, with risks and rewards evenly matched, but there is a cautious outlook due to the company’s ongoing challenges and the potential impact of tariffs on its operations.

In another report released yesterday, BMO Capital also reiterated a Hold rating on the stock with a $90.00 price target.

DG’s price has also changed dramatically for the past six months – from $79.020 to $112.570, which is a 42.46% increase.