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Dollar General Seen As Winner From Wal-Mart Store Closures

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Dollar General Seen As Winner From Wal-Mart Store Closures

Part of Wal-Mart Stores, Inc. (NYSE: WMT)’s scramble to re-position itself to compete with Amazon.com Inc. (NASDAQ: AMZN) and other e-commerce names has included aggressive cost-cutting measures such as the closure of al large number of the company’s experimental Walmart Express and Neighborhood Market locations.

In fact, Walmart recently announced plans to close 125 of these stores by Jan 28.

In a new report, PiperJaffray analyst Peter Keith explains why Dollar General Corp (NYSE: DG) is the best-positioned company to benefit from the closures.

According to Keith’s research, Dollar General has much closer locations to the closing Walmart stores than rivals Dollar Tree, Inc. (NASDAQ: DLTR) and Family Dollar Stores, Inc. (NYSE: FDO).

Related Link: Morgan Stanley: Recessions Aren't What They Used To Be

“All in, we see the market share gains from the closed stores as a 30-40 bp driver and ~$0.035 benefit to 2016 EPS,” he said of Dollar General.

The firm maintains its Overweight rating and $78 target for Dollar General .

Disclosure: the author holds no position in the stocks mentioned.

Latest Ratings for WMT

DateFirmActionFromTo
Feb 2021Morgan StanleyMaintainsOverweight
Feb 2021Morgan StanleyMaintainsOverweight
Feb 2021Raymond JamesMaintainsOutperform

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