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Dollar General’s Turnaround Eyes 2026 Gains
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Dollar General’s Turnaround Could Send the Stock Higher in 2026
Written by Thomas Hughes on December 18, 2025
What You Need to Know
- Dollar General is well-positioned to drive shareholder value in 2026 as its turnaround efforts gain momentum.
- Analyst trends are robust, providing lift to the market and pointing to fresh all-time highs and a complete market reversal.
- Tailwinds in 2025 will strengthen in 2026, providing potential for accelerating growth and outperformance.
Dollar General’s (NYSE: DG) turnaround efforts are gaining traction, and analysts like what they see. The latest activity includes numerous price target increases and upgrades, culminating with an upgrade and price target revision from JPMorgan Chase & Company. Analysts at the firm upgraded the stock to Overweight from Hold and issued a street-high target of $166.
The analyst trends in place are strong, including increased coverage, firming sentiment, and an uptrending consensus price target, forecasting 25% upside at the high end. The trends shifted in early 2025 and are strengthening at year’s end, driving a reversal in stock price action.
According to JPMorgan, Dollar General has tailwinds in 2025 that will strengthen in 2026. A “traffic trifecta” of gainfully employed Americans, middle-income shoppers seeking value, and high-income earners trading down underpins store activity and revenue growth, bolstered by rising store counts and, soon, the impact of tax relief and lower interest rates. Benefits from tip and overtime tax changes will outweigh the effects of SNAP benefit changes, leaving lower-tier consumers with more disposable income for the necessities they can find at Dollar General.
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Cash Flow and Capital Return Outlook Are Bullish for Investors
Dollar General’s improving fundamentals are translating into stronger free cash flow after dividends, setting the stage for what could be its first dividend hike in years. As it stands, the company pays only 35% of its earnings outlook, and given the Q3 results for its fiscal year 2026 (FY2026), it likely has ample room to reward shareholders further.
Dollar General’s balance sheet highlights a healthy position, with cash up, inventory firm, assets flat, and debt and total liabilities down at the end of Q3. The long-term debt is about five times the cash, less than one times the equity, and equity is rising, up by 11% YOY for the quarter. Regarding the dividend, it yields about 1.8% in December.
Institutions also like this retail stock, likely due to its dividend, cash flow outlook, and capital return. MarketBeat data reveals the group owns more than 90% of the stock, providing a solid support base that has bought on balance each quarter of the year.
The activity includes ample selling as some take profits, but the overall balance remains bullish and will likely remain so in the coming quarters.
The company outperformed on both the top and bottom lines, with bottom-line strength significantly stronger than top-line. A 2.5% increase in traffic and flat check averages drove the strength, including benefits to gross and operating margin improvement, which are expected to continue in upcoming quarters. Guidance was also improved, strengthening sentiment trends, and is likely to be cautious.
Dollar General Advances to Confirm Bullish Stock Market Reversal
Dollar General’s stock price halted its retreat early in 2025 and has been reboundingever since. December’s trading saw a decisive bullish breakout, with shares closing above key resistance levels and the long-term moving average. It’s likely that DG will continue to advance in upcoming weeks and may even reach the $160 level in early 2026.
Catalysts for 2026 include the aggressive plans to increase store counts and improve format. The company targets 450 new stores in the United States, plus 10 in Mexico, alongside 2,000 remodels. The question is how quickly those goals can be reached, how much it will cost, and how quickly the results will be seen. Other catalysts include the potential for outperformance in the fourth quarter. The consensus is for steady, approximately 4% revenue growth with margins contracting.
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