Dollar General (DG) is scheduled to report 4Q15 earnings before the market opens tomorrow.

The Street expects Q4 adj EPS of $1.26 on revs up 8% to $5.3 bln

• Last quarter, the company guided for Q4 adj EPS of $1.23-1.28 on implied revs up 6% to $5.2 bln
• Last quarter, the company reported EPS beat by $0.01, revs in-line, comps of 2.3%, and lowered sales, comps guidance for the full year, and the company announced an additional $1 bln to stock buyback. 

Last Q's Guidance for FY 2015

• Downside FY 15 comps guidance of +2.5-2.8% vs prior guidance of +3-3.5%

• Downside FY 15 revs guidance of +8% ($19.5 bln) vs prior guidance of +8-9%

• In-line FY 15 adj. EPS guidance of $3.88-3.93 vs $3.92 Then Cap IQ Consensus
• Expect consistent mid-single digit growth in both units and dollars for the four-week, 12-week, 24-week, and 52-week periods
• Expects capex to be in the range of $500-550 mln for FY15

Guidance to Look For

• Cap IQ Consensus estimates FY 16 adj. EPS of $4.49 on revs up 9% to $22.1 bln
• Cap IQ Consensus estimates Q1 adj. EPS of $0.96 on revs up 6% to $5.3 bln
• 900 new stores in 2016
• +7% square footage growth in 2016

Dollar Tree (DLTR) Earnings Review)

On March 1, DG's closest peer Dollar Tree (DLTR) reported earnings that missed EPS, revs, and guided FY17 EPS below consensus. DLTR opened trading slightly down and fell as much as ~3.5%. DLTR eventually closed trading up ~2% at $82.03, the strength of the broader market could've helped the surge. The stock has sold off ~7% since 3/1. DG did spike lower on the DLTR report, but the dip was bought and the stock has been consolidating into earnings.

Analyst Actions

• On February 23, Buckingham Research initiated w/ a Buy; tgt $94

• On February 16, Morgan Stanley upgraded to Overweight. 

• On January 11, DG was under pressure from cautious Cleveland Research comments

Technicals

Currently, $DG is consolidating just beneath recent multi-month highs. $76 is the current resistance, and the 50 day MA is $72.