Dollar General Corp. DG is expected to report Q3 results during pre-market trading Thursday. Competitor Dollar Tree, Inc. DLTR reported better-than-expected Q3 results, and some investors are expecting a similar outperformance from Dollar General, according to Barclays analyst Karen Short.
Short remains cautious on the discount retailer, maintaining an Equal-Weight rating and $70 price target on the stock. Expectations have only increased following Dollar Tree’s earnings report on November 22, implying no change in the two-year trends, according to the analyst, who also cited a divergence in headwinds for the two dollar-store stocks.
Headwinds Diverge
Evidence of Wal-Mart Stores, Inc. WMT lowering food prices in some geographies likely put more pressure on Dollar General than Dollar Tree, as the latter has a more discretionary mix.
Moreover, Dollar General had a number of broad sweeping price reductions, which were likely introduced broadly in Q3, said Short.
At last check, Dollar General shares were down 0.81 percent at $79.41.
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