The Dollar Family War (NYSE:DG)


Dollar General Corp. (NYSE:DG) announced this Thursday its results for the third quarters, which stood below the speculator predictions. Dollar’s per share earnings stood at $0.78, whereas $4.72 were earned in revenue. According to Thomas Reuters predictions, per share earnings were to be $0.80 and $4.76 billion in revenue. Whereas in comparison to last year the company did better. $0.72 in earnings per share and $4.38 billion in revenue.

Constructing guidance for the next year, the company looks forward to a $3.45 to $3.55 ranger for price per share. Whereas predictions are of $3.50 earnings per share and in terms of revenue a booming $18.96 billion in revenue. Also down the road, a total of 730 stores are to open whereas 875 stores will undergo relocating or remodelling. Now the question on many minds is if Dollar Tree and other Dollar Stores is likely to merge or will Dollar General will acquire the Family Dollar.

At this stage Dollar General is rounding up with a total of $18.96 billion in terms of revenue. Whereas Family Dollar is at $10.85 billion and Dollar tree at $8.6 billion for the year. Dollar General is taking measures to prevent the two from merging and becoming a strong competitor against Dollar General. As once the two names merge it could being Dollar General much stronger competition than it would be able to handle. And would stand in its way of being the strong one among the other names.

According to Rick Dreiling, the chairman and CEO for Dollar General commented that Dollar General is firm on acquiring Family Dollar. Soon figures and statistics will be handed to Family Dollar shareholders for viewing. Hence a deal could be closed at the earliest. He also spoke of the success in the third quarter along with same store sales growth of 2.8 percent, showing increased customer traffic. The company is also overwhelmed with the response they received in their home and apparel departments.

Further success is expected in the holiday season too, both Christmas and New Year is the time full of high expectations and hopes. The Dollar General charts present a very vague picture with shares within $1 of all-time highs. The resistance level is at $67, much better than the $64 back in August and September. On Wednesday when the shares closed, Dollar General was down by 1% at $66.69. Post earnings reports showed the market reaction as being a little negative as the shares were down by less than 1% at $66.30.

The price target at this point according to consensus is set at $71.94 and for the 52 week trading range lies at $53.00 to $67.95. The market cap for Dollar General is at $20 billion. Time will tell whether the companies merge or no or will Dollar General eventually be the dominating one of the Dollar family. Future is not only unpredictable but competition among the family could take a turn for the bad.