William Bias • Today, 12:14 AM
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Here's How Dollar General Is Doing So Far This YearWilliam Bias • Today, 12:14 AM
- 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.
Dollar General Should Hit It Out Of The Park This Quarter
- 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.
Fri, Dec. 5, 9:44 AM
- Dollar General (NYSE:DG) responds to an update from Dollar Tree (NASDAQ:DLTR) on the chase for Family Dollar (NYSE:FDO) within hours.
- The company holds its position that prices at Wal-Mart are what determine its own pricing decisions.
- The working theory is that a DG-FDO combination wouldn't lead to widespread price increases for consumers.
- Good progress on talks with the FTC on store divestitures is reported by Dollar General.
- An update (higher offer?) to Family Dollar shareholders is also promised.
Fri, Dec. 5, 7:20 AM
- Dollar Tree (NASDAQ:DLTR) says it expects a deal to acquire Family Dollar (NYSE:FDO) will close by early February.
- The discounter thinks it will only have to divest a small number of stores.
- Talks with the FTC over the matter are still progressing.
- Dollar Tree couldn't resist taking a shot at Dollar General (NYSE:DG) over its chase of Family Dollar, noting the FTC is likely to ask for divestitures far in excess of the 1,500 stores offered up to DG.
- Family Dollar shareholders are schedule to vote on the Dollar Tree offer on December 23.
Thu, Dec. 4, 8:26 AM
- Dollar General (NYSE:DG) says it remains committed to its acquisition bid for Family Dollar (NYSE:FDO).
- The company plans to give an update on its offer before the Family Dollar shareholder meeting scheduled for December 23.
- Some retail analysts are taking that as an indication a higher offer is coming down the pike.
- Dollar Tree (NASDAQ:DLTR) will be dialed into the developments.
- Family Dollar closed yesterday at $79.48, just below the $80 Dollar General offer price.
Thu, Dec. 4, 7:18 AM
- Dollar General (NYSE:DG) reports same-store sales rose 2.8% in Q3 as both traffic and average transaction price improved over the period.
- The discounter continues to see sales on consumables outpace non-consumables sales, led by tobacco and candy products.
- Gross profit rate -18 bps to 30.1%.
- SG&A expense rate +40 bps to 21.8%.
- Inventory +7.7% to $2.79B.
- Guidance: Full-year revenue growth of +8% expected vs. 8.0%-9.0% prior outlook. Sames-store sales expected to grow below previous guidance of 3.0%-3.5%. EPS forecast to land in middle part of $3.45-$3.55 range vs. $3.50 consensus.
- DG +0.4% premarket.
Thu, Dec. 4, 7:01 AM
Wed, Dec. 3, 5:30 PM
Sat, Nov. 29, 10:29 AM
- Analysts with Gasbuddy.com predict some gas stations in the U.S. will offer $2 per gallon gas by Christmas.
- The last time the average price of gas in the U.S. was below $2 was in March of 2009.
- Forecasts from economists vary widely on the overall gas benefit to consumers for Q4. The high end from the group is an outlook of $300 per household, while the low end is closer to $100.
- Most analysts see an immediate lift for retail chains with large distribution channels. Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Costco (NASDAQ:COST), Dollar General (NYSE:DG), Family Dollar (NYSE:FDO), Dollar Tree (NASDAQ:DLTR), Big Lots (NYSE:BIG), and Five Below (NASDAQ:FIVE) come to mind.
- Airline stocks (JBLU, DAL, UAL, LUV, AAL, RJET, ALK, HA, ALGT, VA) have already ripped strong gains off the OPEC news, although some see even more long-term upside as forward fuel hedges get reworked.
- A sustained period of low gas prices should lift restaurant stocks (CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN) say some analysts.
- The gaming sector is (CZR, PNK, BYD, ISLE, CNTY, MCRI, MGM, NYNY) also an off-the-radar pick to bounce.
Wed, Nov. 19, 3:28 PM
- Dollar General (DG) says it remains committed to a plan to acquire Family Dollar Stores.
- The company say discussions with the FTC over the amount of stores that would need to be divested to push a deal through are still ongoing.
- Previously: FTC may require Dollar General to divest 4K+ stores, Decision time in dollar store space
Wed, Nov. 19, 12:38 PM
- Family Dollar (FDO -1.1%) pushes back the date that shareholders will vote on the proposed merger with Dollar Tree (DLTR +0.2%) to December 23.
- The company expects to have an update by the end of the first week in December on a FTC review of the combination.
- The development doesn't give Dollar General (DG -3.5%) much time to decide if it will raise its offer for Family Dollar amid reports more stores than anticipated will need to be divested to clear regulatory hurdles.
- Previously: FTC may require Dollar General to divest 4K+ stores
Wed, Nov. 19, 5:13 AM
- Dollar General (NYSE:DG) may have to divest more than 4,000 stores, more than double the 1,500 stores it said it was willing to sell, if it wants to gain regulatory approval to buy Family Dollar (NYSE:FDO), reports The New York Post.
- Getting the FTC to change its mind could take months, but rival Dollar Tree (NASDAQ:DLTR) wants a vote on its proposed Family Dollar merger by Dec. 31.
- Without the time to explain its case to the FTC, Dollar General could be forced to either raise its bid or live with the added number of divestitures.
- DG -1.8% premarket
Fri, Nov. 14, 10:20 AM| 1 Comment
Fri, Oct. 31, 2:51 PM
- Dollar General (DG +0.2%) extends its tender offer for shares of Family Dollar (FDO +0.4%) until December 31.
- The original tender expired today with only a small portion of FDO shares ending up in the hands of Dollar General.
- The extension pushes the decision for Family Dollar shareholders past a special meeting set for December 11 to vote on the lower Dollar Tree (DLTR +1.7%) acquisition offer.
- FDO trades at $78.15 vs. the $74.50 DLTR offer and $80.00 DG bid.
Tue, Oct. 28, 11:32 AM
- Redbook notes the timing of Halloween on a Friday is giving a boost to merchandise sales related to the holiday as more consumers prep for parties and celebrations.
- Both Redbook and ICSC's weekly read on retail store sales showed year-over-year improvement with Halloween sales a factor.
- Stores have also been extending their hours to draw in more shoppers.
- Looking for a Halloween boost: DLTR, DG, FDO, KR, SVU, SWY, WMT, TGT, HSY, KRFT, CVS, RAD, WAG, MDLZ.
Fri, Oct. 17, 4:25 PM
- Elliott Management, a veteran of many activist campaigns, says it has a 4.9% stake in Family Dollar (NYSE:FDO), and (in an open letter) urges management to provide Dollar General (NYSE:DG) with "an even playing field in its continuing efforts to acquire the Company at price levels that are clearly superior" to that provided by FDO's current deal with Dollar Tree (NASDAQ:DLTR).
- Elliott asserts FDO was "in a position earlier this year to facilitate a bidding war between two large, well-capitalized strategic acquirers, " and that its board "could have and should have engaged with Dollar General in order to gain a better understanding of their pricing architecture in aid of a more comprehensive anti-trust analysis."
- Proxy war: Elliott has nominated 7 directors to FDO's board to "preserve our ability to seek to elect directors at the 2015 Annual Meeting who are both qualified and committed to achieving a value maximizing outcome for shareholders."
- Though Dollar General is offering $600M more for Family Dollar than Dollar Tree, regulatory scrutiny of its bid is already intense: The FTC sent a second request for info last week.
- FDO +1% AH. DG +0.5%. DLTR -0.5%.
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.
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