Dollar General (NYSE:DG) Q2 Earnings: Leading The Non-Discretionary Retail Pack

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Dollar General (NYSE:DG) and the rest of the non-discretionary retail stocks fared in Q2.

Food is non-discretionary because it's essential for life (maybe not those Oreos?), so consumers naturally need a place to buy it. Selling food is a notoriously tough business, however, as the costs of procuring and transporting oftentimes perishable products and operating stores fit to sell those products can be high. Competition is also fierce because the alternatives are numerous. While online competition threatens all of retail, grocery is one of the least penetrated because of the nature of the product. Still, we could be one startup or innovation away from a paradigm shift.

The 8 non-discretionary retail stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 0.6% while next quarter’s revenue guidance was in line.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 7.6% since the latest earnings results.

Best Q2: Dollar General (NYSE:DG)

Appealing to the budget-conscious consumer, Dollar General (NYSE:DG) is a discount retailer that sells a wide range of household essentials, groceries, apparel/beauty products, and seasonal merchandise.

Dollar General reported revenues of $10.73 billion, up 5.1% year on year. This print exceeded analysts’ expectations by 0.5%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts’ EBITDA estimates and full-year EPS guidance exceeding analysts’ expectations.

Unsurprisingly, the stock is down 8.9% since reporting and currently trades at $101.43.

Is now the time to buy Dollar General? Access our full analysis of the earnings results here, it’s free.

Sprouts (NASDAQ:SFM)

Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ:SFM) is a grocery store chain emphasizing natural and organic products.

Sprouts reported revenues of $2.22 billion, up 17.3% year on year, outperforming analysts’ expectations by 2.3%. The business had an exceptional quarter with a solid beat of analysts’ EBITDA estimates and full-year EPS guidance beating analysts’ expectations.

Sprouts delivered the biggest analyst estimates beat and fastest revenue growth among its peers. Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 24.6% since reporting. It currently trades at $119.25.

Is now the time to buy Sprouts? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: BJ's (NYSE:BJ)

Appealing to the budget-conscious individual shopping for a household, BJ’s Wholesale Club (NYSE:BJ) is a membership-only retail chain that sells groceries, appliances, electronics, and household items, often in bulk quantities.

BJ's reported revenues of $5.38 billion, up 3.4% year on year, falling short of analysts’ expectations by 1.9%. It was a slower quarter as it posted full-year EPS guidance slightly missing analysts’ expectations and a slight miss of analysts’ EBITDA estimates.

BJ's delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 9.6% since the results and currently trades at $96.02.

Read our full analysis of BJ’s results here.

Dollar Tree (NASDAQ:DLTR)

A treasure hunt because there’s no guarantee of consistent product selection, Dollar Tree (NASDAQ:DLTR) is a discount retailer that sells general merchandise and select packaged food at extremely low prices.

Dollar Tree reported revenues of $4.57 billion, up 12.3% year on year. This result beat analysts’ expectations by 2%. It was a very strong quarter as it also logged a beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.

Dollar Tree pulled off the highest full-year guidance raise among its peers. The stock is down 15% since reporting and currently trades at $94.66.

Read our full, actionable report on Dollar Tree here, it’s free.

Walmart (NYSE:WMT)

Known for its large-format Supercenters, Walmart (NYSE:WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.

Walmart reported revenues of $177.4 billion, up 4.8% year on year. This print topped analysts’ expectations by 0.8%. Zooming out, it was a slower quarter as it logged a significant miss of analysts’ EBITDA estimates and full-year EPS guidance missing analysts’ expectations.

The stock is flat since reporting and currently trades at $102.64.

Read our full, actionable report on Walmart here, it’s free.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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