Munson says Dollar General stock is ‘so cheap’ after Q3 earnings

Dollar General Corp (NYSE: DG) opened in the green this morning after reporting market-beating results for its fiscal third quarter.

Dollar General stock up on reiterated guidance

Shares of the discount retailer are being rewarded also because it reiterated its guidance for the full year.

Dollar General expects up to a 2.5% annualised growth in sales in its fiscal 2023 on $7.10 to $7.60 of per-share earnings. According to Lee Munson of Portfolio Wealth Advisors said recently:

The New York listed firm ended the quarter with $7.4 billion worth of total merchandise inventories – up about $300 million versus the same quarter last year. Dollar General stock is currently down 45% year-to-date.

Dollar General recently brought back Vasos as CEO

The earnings report arrives more than a month after Dollar General reinstated Todd Vasos as its Chief Executive.

Vasos was not content with the performance his company reported for Q3 on Thursday. Still, Munson said on CNBC’s “The Exchange”:

Note that the Goodlettsville-headquartered firm plans on opening 800 new stores in its fiscal 2024 and remodel about 1,500 of the existing ones as well, as per the press release. Wall Street currently has a consensus “hold” rating on Dollar General stock.

Notable figures in Dollar General Q3 earnings

• Earned $276.2 million versus the year-ago $526.2 million
• Per-share earnings also tanked from $2.33 to $1.26
• Sales climbed 2.4% year-over-year to $9.694 billion
• Consensus was $1.20 a share on $9.644 billion in sales

Dollar General reported gross profit as a percentage of its net quarterly sales at 29% today – down about 150 basis points versus the same quarter last year due to increased shrink and higher markdowns. Munson added: