Dollar General (DG) or Dollar Tree (DLTR): Which Stock Is Better?
Ali AhmedSat, September 5, 2026 at 3:42 PM GMT+3 5 min read
Dollar Tree, Inc. (NASDAQ:DLTR) and Dollar General Corporation (NYSE:DG) both reported quarterly results above sales expectations as lower-priced essentials continued to drive consumers to their stores amid economic uncertainty. Both retailers also benefited from tariff refunds, which helped support their higher full-year profit targets.
Dollar General Corporation (NYSE:DG) saw a 3.5% year-over-year increase in quarterly same-store sales, supported by growth across categories like seasonal, home products, and apparel. The company lifted its fiscal 2026 same-store sales growth forecast from its earlier range of 2.2% to 2.7% to 2.5% to 2.9%.
Dollar General Corporation (NYSE:DG) now expects fiscal 2026 earnings per share of about $7.80 to $8.00. This includes a benefit of about 25 cents from tariff refunds after related reinvestments. Dollar Tree, Inc. (NASDAQ:DLTR) also raised its full-year earnings forecast to $7.70 to $8.05 per share, which includes a benefit of about 60 cents from tariff refunds.
Bull Case
It is not difficult to argue that the latest results point to improving momentum at both discount retailers. Dollar General Corporation (NYSE:DG) delivered its seventh consecutive earnings beat, with earnings per share coming in 11% above analysts' expectations. Even after excluding the 25-cent net benefit from tariff refunds, the company's earnings were up approximately 20% year-over-year.
Dollar General Corporation (NYSE:DG) experienced growth across all four of its product categories, with non-consumables performing better than consumables. Traffic increased 2% during the quarter, while the company also reported continued improvement in shrink and damages despite increasingly difficult comparisons. The company raised the midpoint of all its key fiscal 2026 guidance metrics. Additionally, Dollar General Corporation (NYSE:DG) also now plans share repurchases of up to $700 million under its existing authorization, compared with previous fiscal 2026 guidance that assumed no share repurchases
Following the results, Raymond James raised its price target on Dollar General Corporation (NYSE:DG) to $150 from $145 while maintaining an Outperform rating. Bernstein SocGen Group also maintained its Outperform rating and $160 price target on the stock.
Dollar Tree, Inc. (NASDAQ:DLTR) also showed signs of improving performance as comparable sales and traffic improved on both a one-year and two-year basis, with traffic turning modestly positive in the quarter. Raymond James raised its price target on the stock to $145 from $140 while keeping its Outperform rating. The firm said Dollar Tree, Inc.'s (NASDAQ:DLTR) Q2 results supported its view that the company's underlying earnings trajectory is improving.
Bernstein SocGen Group also increased its price target on Dollar Tree, Inc. (NASDAQ:DLTR) from $127 to $130 but it maintained its Market Perform rating on the stock.
Bear Case
Despite the impressive quarterly results, a big concern is the temporary contribution from tariff refunds. Dollar General Corporation (NYSE:DG) received most of its anticipated tariff refunds during the second quarter. The company does not expect a material refund benefit after reinvestments during the second half of the year. Excluding the refund benefit, gross-margin expansion was 46 basis points, which is much smaller than the reported increase of 127 basis points. This benefit, which helped profitability, is not expected to continue at the same level.
Dollar General Corporation (NYSE:DG) also expects elevated transportation and fuel costs to remain a headwind during the second half of the year.
Dollar Tree, Inc. (NASDAQ:DLTR) faces a similar concern as the company received about $383 million in tariff refunds. This contributed significantly to the company's strong profitability during the quarter. Gross margin saw a jump of 850 basis points to 42.9%, with approximately 680 basis points of the increase coming from the net impact of tariff refunds.
This suggests that the company's sharp margin improvement is not fully representative of the underlying performance of the business. As and when the temporary benefit from tariff refunds fades, Dollar Tree, Inc.'s (NASDAQ:DLTR) margins and earnings could come under pressure.
What the Numbers Say
As per Insider Monkey's database, hedge fund interest in both companies has increased recently. The number of hedge funds holding Dollar Tree, Inc. (NASDAQ:DLTR) rose to 54 in Q2 2026, up from 43 in the first quarter. Dollar General Corporation (NYSE:DG) also saw its hedge fund count increase to 53 in Q2 2026, up from 47 in Q1 2026.
Valuation also seems to support the bull case for both the companies. Dollar General Corporation (NYSE:DG) trades at 16.81 times forward earnings, while Dollar Tree, Inc. (NASDAQ:DLTR) trades at 18.76 times. Both the stocks are trading below the broader retail-discount stores industry's average forward P/E of 26 times.
However, short interest points to a relatively more favorable view of Dollar General Corporation (NYSE:DG). As of August 14, 3.34% of the company's float was sold short, compared with 5.03% for Dollar Tree, Inc. (NASDAQ:DLTR).
While both Dollar General Corporation (NYSE:DG) and Dollar Tree, Inc. (NASDAQ:DLTR) have shown signs of improving operating performance, supported by better traffic, sales growth, and higher earnings expectations, investors may need to carefully watch how both companies perform after the temporary boost from tariff refunds and when other cost pressures become more visible.
While we acknowledge the potential of DG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on thebest short-term AI stock.
READ NEXT: Rosenblatt Sees Booking (BKNG) as the Best-Positioned Online Travel Agency Despite Challenges and Comstock Resources (CRK) Bags $2.1B New Deals, Climbs 11%.
Disclosure: None. Follow Insider Monkey on Google News.
Yorumlar (0)
Giriş yaparak yorum yazabilirsin.
İlk yorumu sen yaz.