Yahoo Finance Time to Buy Lululemon or Dollar General Stock as Earnings Approach?
There are several notable companies set to report their quarterly results on Thursday, August 31.
Two big retailers’ investors will be watching are Lululemon LULU and Dollar General DG with both being leaders in their respective industries.
Let’s see if now is a good time to buy Lululemon or Dollar General stock and if their industry dominance can continue.
Lululemon Q2 Preview
Athletic apparel leader Lululemon is a favorite among consumers and investors alike with the company’s quarterly results closely monitored.
Lululemon stock is up a respectable +17% this year and LULU shares tend to pop after favorable quarterly earnings. This is especially true when better than expected results are accompanied by positive guidance.
Optimistically, Lululemon’s Q2 earnings are projected to jump 15% to $2.53 per share compared to $2.20 a share in the prior-year quarter. Plus, Q2 sales are forecasted to climb 16% to $2.17 billion versus $1.87 billion a year ago.
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It's also noteworthy that the Zacks Expected Surprise Prediction (ESP) indicates Lululemon could surpass earnings expectations with the Most Accurate Estimate having Q2 EPS at $2.58 and 2% above the Zacks Consensus.
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Dollar General Q2 Preview
Dollar General is one of the largest discount retailers in the nation and the company’s Q2 results will offer key insight into the broader trend of consumer shopping behavior.
Unfortunately for Dollar General, stores have witnessed less traffic this year which has weighed on profits. After lowering its sales growth and EPS guidance for the current fiscal year, Dollar General stock has now dropped -36% YTD.
However, with DG shares trading near 52-week lows investors may be pondering if now is a buying opportunity. Dollar General expected the trend of less traffic and lower profits to continue with Q2 earnings forecasted to be down -16% YoY at $2.49 per share. This is despite quarterly sales projected to be up 5% to $9.94 billion.
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EPS Outlook
Wall Street will be eying the outlook for Lululemon and Dollar General during their quarterly reports as there are mixed opinions on the strength of the American consumer at the moment.
Still, Lululemon has strived to increase its international expansion operating 40 stores and three local language sites in eight countries which include the likes of France, Germany, and the U.K.
Lululemon also announced in June that it would be expanding into Spain with annual earnings forecasted to jump 18% in its current fiscal 2024 at $11.93 a share. Even better, FY25 earnings are projected to climb another 15% to $13.78 per share.
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Pivoting to Dollar General, the company's primary market is the U.S. with operations in Mexico as well. While Dollar General is more reliant on the domestic consumer, the company has planned to continue its expansion.
Dollar General opened 212 new stores during Q1 with plans of opening 1,050 new stores this year. Annual earnings are now expected to dip -6% in Dollar General's current FY24 but rebound and rise 8% in FY25 to $10.86 per share.
Furthermore, Dollar General offers a generous 1.52% dividend yield which is attractive to investors waiting for a turnarond in its stock.
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Bottom Line
Ahead of their Q2 reports on Thursday, Lululemon and Dollar General stock both land a Zacks Rank #3 (Hold). The growth and expansion efforts of both retail giants should remain promising. With that being said, the outlook and guidance they can give will be crucial to LULU and DG shares moving higher.
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Dollar General Corporation (DG) : Free Stock Analysis Report
lululemon athletica inc. (LULU) : Free Stock Analysis Report
