Dollar General reported second-quarter earnings that exceeded expectations, with adjusted earnings per share rising 24% to $2.48, compared with a $2.00 consensus forecast. The company also raised its full-year adjusted EPS guidance to a range of $7.80 to $8.00, up from the prior $7.20 to $7.45.
Same-store sales increased 3.5% in the quarter, driven by a 2.0% rise in customer traffic and a 1.5% increase in average transaction value, marking the fifth consecutive quarter of positive comps. Gross profit margin expanded by 127 basis points to 32.6%, supported in part by tariff refunds that contributed approximately 81 basis points to the margin and roughly $0.25 per share after reinvestment. Operating profit rose 29.2% to $769.2 million.
Inventory levels declined 6.5% year-over-year, while operating cash flow increased 28% year-to-date to $2.8 billion. The retailer trades at 15.5 times its fiscal 2027 earnings estimate, up 22.75% over the past three months but still 19% below its 52-week high of $158.23.
Dollar General operates over 2,000 SKUs priced at $1 or less, with 70% of products priced at $3 or below. The company has completed 651 store remodels under its "Project Elevate" initiative and 524 under "Project Renovate." The next earnings release is scheduled for October 2026, with Wall Street expecting adjusted EPS of $1.38 on revenue of $11.10 billion.
Analysts have set price targets ranging from $140 to $150, with Wolfe Research at $143, Oppenheimer at $150, and Raymond James at $145. CEO Todd Vasos will step down in January 2027.
