As earnings season comes to a close, dollar store mainstays Dollar General Corp. DG and Dollar Tree, Inc. DLTR will face off delivering their third-quarter earnings in the coming weeks.
Both companies have delivered similar returns year-to-date; Dollar General is up over 7 percent on the year, with Dollar Tree coming in slightly lower at 6 percent. Dollar Tree and Dollar General have both been crushed since their last release, however, falling 16 and 13 percent, respectively.
MKM Opts For Dollar General
MKM Partners maintains a Neutral rating on Dollar Tree and keeps its Buy rating on Dollar General heading into the third-quarter release. With Wal-Mart Stores, Inc.WMT's recent release providing some guidance to the overall retail environment, MKM is expecting modest results.
“We continue to prefer DG, which is cheaper, isn’t contending with an acquisition, and could have more success in responding to a more challenging industry backdrop,” said MKM.
Despite the bullishness on Dollar General, MKM analysts expressed the sentiment that they were “probably too aggressive” on their FY 2017 forecast and cut EPS estimates from $5.20 to $5.05.
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