William Bias • Wed, Dec. 17
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Here's How Dollar General Is Doing So Far This YearWilliam Bias • Wed, Dec. 17
- New stores and increased customer traffic resulted in solid fundamental expansion.
- Dollar General possesses a reasonable amount of long-term debt.
- Dollar General has expanded its fundamentals at a solid pace over the past five years rewarding its shareholders in the process.
- DG’s growth momentum has already blasted through Black Friday weekend.
- DG’s guidance and analyst estimates may be far too conservative.
- January was typically one of its seasonally superior months, but last year was killed by the weather. Hence, this January’s sales should be an easy comp.
- Efforts to benefit from consumer spending patterns are helping grow top-line numbers and stabilize gross margin decline.
- Potential acquisition of FDO holds upside potential for stock.
- Share repurchase activity will remain important stock price driver in years ahead.
- Analysts anticipating robust next five year growth rate of 14.5%.
- DG reported fiscal third-quarter results.
- The report further raised my confidence in DG.
- I anticipated a slightly better report but am happy.
Should You Consider Dollar General On Weakness Following Its Q3 Earnings Miss?Joey Solitro • Thu, Dec. 4
- Q3 2014 earnings were released on December 4.
- Earnings per share and revenue fell short of expectations.
- Same-store sales increased 2.8%.
- The company updated its full year outlook.
- The stock has responded by falling.
- Exceeded Q2 2014 expectations on August 28.
- Q3 2014 earnings are scheduled to be released on December 4.
- The current estimates call for significant growth.
- The stock has returned more than 11% year-to-date.
- Numerous hints in the last conference call suggest a possible positive surprise against an easy comp.
- Tobacco sales are helping DG grow. Competitor CVS ditching tobacco can’t be hurting DG.
- Cheap gas helps not just sales but DG’s costs.
Smoke And A Coke? Dollar General Maintains An Old Reliable Sales Initiative
- Dollar General remains a tobacco retailer.
- Cigar sales up 2x-3x historical levels.
- Does Phillip Morris have a role in Dollar General's hostile takeover of Family Dollar?
- Institutional ownership and growth charts: Dollar General and Altria Group are top performers.
- On September 10, news broke that Dollar General would be conducting a hostile bid for Family Dollar valued at $80 per share.
- This confirms my opinion that Dollar General, over Dollar Tree, has the most to benefit from a transaction, and that the deal is pricey for the business.
- While specifics weren't given, my previous work indicated that Dollar General would very much like to push for a deal in its favor.
Dollar General Should Let Family Dollar Go And Pursue Fred's Instead
- Family Dollar is being bought by Dollar Tree when recent speculation was that Dollar General would be the acquirer.
- Dollar General offered a higher bid, but Family Dollar turned down the offer.
- Fred's Super Dollar continues its search for a buyer.
Dollar General Earns Bullish Thesis On Its Way To Delivering Growth In The Long TermEquity Watch • Tue, Sep. 9
- Promotional activities will strengthen the market position and grow the top line in the long run.
- Efforts to improve performance and industry position will put pressure on margins.
- Dollar General's growth prospects solidified if it successfully acquires Family Dollar.
Update: Dollar General Raises Bid For Family Dollar, Threatens Hostile Takeover
- Dollar General has raised its bid for Family Dollar, moving to $80 per share, up from its original offer of $78.50 per share and over Dollar Tree’s earlier offer.
- In a previous article, I predicted that Dollar General’s efforts could push Family Dollar’s share price higher.
- Today’s event confirms that opinion and the deal isn’t settled yet.
- Dollar General announced that it would be willing to up the ante on its proposed purchase of Family Dollar, offering $80 per share.
- This news confirms my opinion that Dollar General realizes that it has more to gain from purchasing the company than Dollar Tree does.
- While I could not predict if another buyout offer would, in fact, materialize, I alluded to a high possibility that it could.
Update: Dollar General Raises Its Bid For Family Dollar To $80 Per ShareThe Specialist • Tue, Sep. 2
- Dollar General tops its previous all-cash bid at $78.50 with an $80 bid.
- This adds confidence to my theory that Dollar General fears a Dollar Tree merger with Family Dollar.
- I was expecting a higher offer and continue to expect a still high offer to possibly come.
Is Fear The Real Reason Dollar General Wants Family Dollar?
- If Dollar Tree gets Family Dollar then Dollar General may be at a competitive disadvantage.
- Dollar General is aggressively pursuing the $1 price point business Dollar Tree is in.
- The final buyout price may be much higher.
- For the quarter, Dollar General matched analyst estimates but came up short on sales growth, suggesting that the business isn't growing as rapidly as Mr. Market might like.
- This reinforces my opinion that analyst forecasts might have been asking too much but also suggests that the business is still an attractive long-term prospect.
- While this information wasn't necessarily anticipated in my earnings preview, it was implied that growth moving forward might be difficult to achieve without acquiring Family Dollar.
Is Dollar General Poised To Beat The Whisper Number?
- The whisper number is $0.83, in line with the analysts' estimate.
- Dollar General has a 37% positive surprise history (having topped the whisper in 10 of the 27 earnings reports for which we have data).
- The overall average post earnings price move is 'positive' (beat the whisper number and see strength, miss and see strength) when the company reports earnings.
Dollar General Looks Interesting But Pricey As Earnings Near
- For the quarter, analysts have what appear to be high expectations for the discount giant.
- Over the past few years, the business has had a heck of a run, suggesting that its long-term prospects could be bright.
- These factors, combined with its potential buyout of Family Dollar, implies that Dollar General is an interesting company, but its strong performance comes at a pretty steep price.
- Family Dollar rejected Dollar General’s bid looking for a faster close with Dollar Tree.
- We still have a long-term bullish thesis on Dollar General and believe they are better off without Family Dollar.
- While we didn’t expect Dollar General’s deal to get rejected (it’s over 5% higher than Dollar Tree’s) we were aware of the regulatory concerns.
Update: Dollar General's Bid For Family Dollar Stores Is Rejected
- Family Dollar Stores has announced its rejection of Dollar General's $78.50 all-cash bid for the company.
- This news comes as a surprise given the bid's superiority in both amount and composition to Dollar Tree's $74.50 cash and stock offer.
- As Family Dollar Stores may be looking for a higher bid as highlighted in my earlier article, the ongoing support for Dollar Tree's $74.50 offer may not continue.
Wed, Oct. 15, 12:58 PM
- Top Wal-Mart (WMT -2.3%) U.S. exec Greg Folan announced the company will open between 180 and 200 Neighborhood Markets stores during its next fiscal year.
- The expansion plan for the concept is smaller than the forecast for 270 to 300 NM stores to be opened this fiscal year.
- Neighborhood Markets has had a stronger impact on the dollar store group (FDO, DG, DLTR) than grocery stores so far, according to analysts.
- Highlights from Wal-Mart's investor day
- Wal-Mart investor meeting webcast
Tue, Oct. 14, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Fri, Oct. 10, 5:31 PM
- The FTC has issued a second request for additional info to Dollar General (NYSE:DG) regarding its $9.1B buyout offer for Family Dollar (NYSE:FDO). State AGs have already been probing the bid on antitrust grounds.
- DG -1.2% AH. For now, Family Dollar continues supporting Dollar Tree's (NASDAQ:DLTR) $8.5B offer.
Mon, Sep. 29, 2:50 PM
- Deutsche Bank thinks Dollar Tree (DLTR +0.6%) and Dollar General (DG -0.3%) could be prepping to make fresh bids for Family Dollar Stores (FDO).
- The investment firm is sticking with its Buy rating on FDO amid the potential for new action.
- What to watch: State AGs are reportedly looking at bids from Dollar General and Dollar Tree for FDO. It's possible the new offers from the discounters could involve a plan to divest more stores in front of the merger to appease regulators.
Wed, Sep. 24, 8:13 AM
- Retail sales could increase by 4.5% to $986B this holiday season on an improved macroeconomic backdrop, forecasts Deloitte Touche.
- The mark would easily top last year's 2.8% rise.
- Online sales are tipped to rise by 14%.
- Promotional activity across broad retail has been dialed back a touch during the back-to-school season, but is still a risk to margins heading into the crucial shopping period.
- What to watch: This holiday season could be an operational pressure cooker for UPS (NYSE:UPS) and FedEx (NYSE:FDX) with demand expected to be high.
- Related stocks: AAP, AEO, ANF, BBBY, BBY, BJ, CHS, COH, COST, DG, FDO, FL, GPS, JCP, JNY, JWN, KSS, LB, LULU, M, NDN, PIR, RL, TGT, TIF, TJX, UA, URBN, VFC, WMT, ZLC, PERY, SQBG, VNCE, KORS, GIII, KATE, GIL, VRA, ICON, PSMT, AMZN.
- Related ETFs: XLY, XRT, VCR, RTH, RETL, IYK, FXD, FDIS, PMR, UGE, RCD, SZK
Tue, Sep. 23, 8:10 AM
- Halloween spending by consumers in the U.S. is expected to rise to $11.3B this year, according to an estimate from ICSC.
- Discount stores (DG, DLTR, FDO) and grocery stores (KR, SVU, SWY, WMT, TGT) are expected to keep a lion's share of the costume spend with shoppers indicating price and the ability to touch costumes as the biggest factors in deciding where to shop.
- Halloween is one of the few calendar events where online has stayed more of a bit player with only an estimated 7% share of purchases.
Wed, Sep. 17, 9:07 AM
- Family Dollar (NYSE:FDO) recommends shareholders pass on the tender offer of Dollar General (NYSE:DG) as it continues to throw its support behind a merger with Dollar Tree (NASDAQ:DLTR) which it sees as more likely to clear regulatory hurdles.
- The company maintains the $80-per-share offer from Dollar General is "highly conditional" and illusory in nature.
Fri, Sep. 12, 2:02 PM
- Wal-Mart (WMT -0.5%) plans to rebrand all of its Express stores to Neighborhood Market in a move that signals a stronger push into grocery.
- The new strategy means that Neighborhood Market stores will range in size from 15K to 40K square feet.
- The company is still testing the smaller Walmart To Go and Walmart On Campus concepts.
- What to watch: Though there's plenty of retail chains which could be impacted by Wal-Mart's NM push, Gilford Securities reasons that dollar stores (FDO, DLTR, DG) and drugstores (RAD, CVS, WAG) top the list.
Fri, Sep. 12, 7:36 AM
- Dollar General (NYSE:DG) expects to receive feedback from regulators by the middle of October on its proposed merger with Family Dollar.
- A decision to go "hell or high water" with a final offer will be made by the retailer at that point, sources tell The New York Post.
- Dollar General's hostile tender offer is at $80 per Family Dollar share.
Wed, Sep. 10, 10:50 AM
- Though management at Family Dollar (FDO -0.2%) is nervous about the regulatory risk of merging with Dollar General (DG), institutional and retail investors are likely to focus more on the higher per-share offer offered by Dollar General than Dollar Tree (DLTR -0.1%), say analysts.
- Ready for action: Dollar General says it has buyout funding commitments from Goldman Sachs and Citigroup in its back pocket. The company's tender offer expires on October 8.
- Still in the mix: Dollar Tree could still match the Dollar General offer, although Edward Jones notes the company lacks the firepower of its discounter rival and is a good bet to stand pat.
- Previous: Wal-Mart the wildcard in battle for Family Dollar.
Wed, Sep. 10, 6:29 AM
- Dollar General (NYSE:DG) initiates a tender offer to acquire all the shares of Family Dollar (NYSE:FDO) at $80 per share.
- The tender is set to expire on October 8 unless extended by the company.
- Dollar General reiterates its position that it's confident the merger will pass regulatory review.
- FDO +0.3% to $78.96 premarket.
Wed, Sep. 10, 1:51 AM
- Following the rejection of its second bid for rival Family Dollar (NYSE:FDO), Dollar General (NYSE:DG) is preparing to go hostile, taking its $9.1B offer directly to shareholders.
- Family Dollar rejected Dollar General's bids citing antitrust risks, and wants DG to assume the entire risk of the deal, such as carrying out any divestiture that antitrust regulators ask for.
- While Dollar General believes it has already offered far more divestitures than is necessary, it has not gone as far as Dollar Tree (NASDAQ:DLTR) which has included a commitment to divest as many stores as necessary to clear antitrust hurdles.
Tue, Sep. 9, 9:56 AM
- Though Family Dollar Stores (FDO -0.1%) seems to have some nervous feet over potential regulatory issues if it were to be acquired by Dollar General (DG -0.4%), there's a case to be made that the deal could fly.
- Research from Kantar Research indicates that in some markets 90% of Family Dollar customers also shop at Wal-Mart (WMT -0.4%).
- The data point bolsters the argument that the Bentonville giant should be a consideration by regulators as they examine the competitive implication of a Dollar General-Family Dollar merger.
- Analysts also think Dollar General could flip the anti-competitive argument around to make the case that a DG-FDO combination would cut into Wal-Mart's dominance in many markets.
Fri, Sep. 5, 8:55 AM
- Citing antitrust concerns, the Family Dollar (NYSE:FDO) board rejects Dollar General's (NYSE:DG) latest bid, which came at a 7.4% premium to Dollar Tree's (NASDAQ:DLTR) buyout price.
- "There is a very real and material risk that the transaction proposed by Dollar General would fail to close, after a lengthy and disruptive review process," says Family Dollar boss Howard Levine.
- Family Dollar and Dollar Tree amend their merger agreement, with Dollar Tree committing to divest as many stores as necessary to receive antitrust clearance. The two also accelerate their expectations for closing the deal to as early as the end of November.
- FDO -0.8%, DG -1.4%, DLTR -1.4% premarket
Tue, Sep. 2, 9:07 AM
- Family Dollar (NYSE:FDO) indicates it will review the updated offer from Dollar General (NYSE:DG) with advisers before it will offer a recommendation to shareholders.
- The Dollar General bid commands a 7.4% premium over what discounter peer Dollar Tree (NASDAQ:DLTR) offered up and includes a commitment to shed up to 1.5K stores.
- Retail analysts think the ample competition in the supercenter/superstore/supermarket space will keep regulators largely at bay as they evaluate the potential combination of the two dollar store chains.
- FDO +0.8% to $80.45, a shade above the $80 bid price from Dollar General, in an indication that some investors are betting yet another offer could come down the road.
Tue, Sep. 2, 6:48 AM
- Dollar General (NYSE:DG) raises its offer price to acquire Family Dollar to $80 a share to top a prior bid of $78.50 per share.
- The company also agrees to shed as many as 1.5K stores if necessary in order to make the merger fly with the FTC.
- A $500M reverse break-up fee relating to antitrust issues is also on the table.
- DG-FDO merger timeline
- Premarket: DG +1.7%, FDO +0.8%.
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