Dollar General (DG) exceeded Q3 earnings by 36%, with a 110-basis-point increase in gross margin to 29.9%, leading to a 20% rally. Meanwhile, Dollar Tree (DLTR) missed revenue estimates despite 9.4% growth, with operating margin dropping 40 basis points to 7.2%. Dollar General is prioritizing real estate projects and dividends over buybacks. CEO Todd Vasos announced 4,885 real estate projects planned for fiscal 2026.

Dollar General reported Q3 earnings of $1.28 per share, surpassing estimates by $0.34 and posting its fourth consecutive quarterly beat. Revenue of $10.65 billion slightly exceeded the $10.60 billion consensus, with a 4.6% year-over-year growth. Gross margin rose by 110 basis points to 29.9%. Operating income increased by 31.5% to $425.9 million.

Dollar Tree’s Q3 results showed mixed outcomes, with revenue of $4.75 billion missing estimates but growing by 9.4% year-over-year. Adjusted earnings of $1.21 per share were higher than estimates, but gross margin only expanded by 40 basis points to 35.8%. Operating margin decreased by 40 basis points to 7.2%.

Dollar General is focusing on premiumization and brand strength, leveraging pricing power to drive customers to higher-margin products. In contrast, Dollar Tree is emphasizing multi-price flexibility and store format changes, shifting beyond the traditional $1 price point. Dollar General’s fundamentals demonstrate stronger margin expansion and operational discipline compared to Dollar Tree.

Dollar General’s forward P/E ratio of 14.71 reflects 43.8% earnings growth acceleration, while Dollar Tree trades at a forward P/E of 17.48 despite slower earnings momentum. Dollar Tree shows higher same-store sales at 4.2% but faces operating margin compression, raising concerns about sustainability. Conversely, Dollar General displays margin expansion and clearer profitability metrics.

Read more at Yahoo Finance: Dollar General Beats Estimates by 36% as Dollar Tree Stumbles