Dollar General (DG) Q3 Results Alleviate Fears - Goldman

On Thursday morning, Dollar General (NYSE: DG) reported Q1 EPS of $0.72, $0.02 better than the analyst estimate of $0.70. Revenue for the quarter came in at $4.38 billion versus the consensus estimate of $4.42 billion. In the view of Stephen Grambling, results alleviate fears related to weak performance at peers.

"The softer top line was more than offset by less gross margin pressure (-60bp vs. our -70bp) and better SG&A leverage (-40bp vs. our -35bp), leading to a $0.01 EBIT beat. Below the line, lower interest and lower taxes added a penny. Management raised the low end of its FY13 guidance to $3.18-$3.22 from $3.15- $3.22 (vs. GS/Consensus of $3.19/$3.22) on comp growth of 4%-5%. The company also plans to open 700 new stores in FY14 and remodel or relocate 525 stores, resulting in total selling square footage growth of 6-7%," said Grambling.

"With expectations lower after soft results from peers, we believe the better results will alleviate fears despite the softer top line," he added.

Goldman Sachs has a Neutral rating on Dollar General with a price target of $64.00.

For an analyst ratings summary and ratings history on Dollar General (NYSE: DG) click here. For more ratings news on Dollar General click here.

Shares of Dollar General closed at $56.37 yesterday.

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