Why Dollar General Stock Soared Today

Shares of Dollar General (NYSE: DG) were up on Thursday. The company's stock gained 6.8% as of market close but was up as much as 8.4% earlier in the day. The leg up comes amid broader market weakness, with the S&P 500 (SNPINDEX: ^GSPC) down 1.4% and the Nasdaq Composite (NASDAQINDEX: ^IXIC) down 2%.

The discount retailer reported mixed earnings, but set guidance for 2025 that exceeded Wall Street's targets.

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Dollar General delivers on revenue

Dollar General reported its Q4 numbers on Thursday. The company posted earnings per share (EPS) of $0.87 on $10.3 billion in sales. Wall Street was expecting $10.26 billion. Revenue for the full year came in at $40.61 billion, up nearly 5% from last year's $38.69 billion.

The company expects comparable-store sales to grow 2.2% in 2025, beating an analyst consensus of 1.8%.

The company is defying the trend

Other major retailers in recent weeks set cautious forecasts as consumer sentiment worsens and fears of a recession grow. The recent uncertainty brought on by escalating trade tensions between the U.S. and its major trading partners is making the retail industry nervous. This made Dollar General's relative optimism stand out.

Still, the retailer faces significant headwinds as consumers are likely to tighten their wallets in the coming months. The company also faces increasing competition from discount giants like Walmart, which have lowered prices in response to consumer sentiment.

I would hold off on Dollar General given the macro environment; persistent inflation, a possible recession, and sinking consumer sentiment don't exactly make fertile ground for retail.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.