At least six Dollar General (NYSE:DG) analysts downgraded the stock after the retailer reported weaker-than-expected results and lowered its full-year guidance.
DG shares fell 12.2% yesterday and are down a further 1.3% today.
In the second quarter results, Dollar General reported comparable sales decreased by 0.1%, falling short of the average analyst estimate of a 0.9% increase and a significant contrast from the previous year's growth of 4.6%.
EPS for the quarter was $2.13 on net sales of $9.80 billion, while analysts were looking for revenue of $9.91B.
“We were disappointed by the 2Q23 results—reflecting soft sales, poor execution, and ongoing investments—and even more so by the softer comp and profit outlook for 2H23, which we believe is likely to continue in 1H24,” Telsey Advisory Group analysts wrote in a statement.
“We are moving to the sidelines until we see stabilization of operating performance,” they added after downgrading the rating to Market Perform.
Raymond James analysts cut the rating to an Outperform from a Strong Buy following F2Q23 earnings.
“While we are disappointed with the recent guidance reductions, we do not think Dollar General is a permanently broken business and believe the cost pressures hindering earnings will eventually abate and the company will return to more consistent earnings growth. That said, there still is risk that performance may not have reached the bottom,” they wrote.