NEW YORK (TheStreet) -- Shares of Dollar General (DG) - Get Dollar General Corporation Report were gaining 2.4% to $75.52 on Wednesday morning ahead of the discount retailer's fiscal second quarter financial results, which are due out before the opening bell on Thursday.

Analysts expect Dollar General to report earnings of 84 cents a share on revenue of $5.14 billion for the second quarter.

Dollar General reported earnings of 84 cents a share for the first quarter, beating analysts' estimates of 81 cents a share. The company reported revenue of $4.92 billion for the first quarter, compared to analysts' estimates of $4.94 billion.

For the second quarter of 2014 the retailer reported earnings of 83 cents a share, in line with analysts' estimates. Dollar General saw revenue of $4.52 billion in the year-ago quarter, below analysts' estimates of $4.56 billion.

TheStreet Recommends

TheStreet Ratings team rates DOLLAR GENERAL CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate DOLLAR GENERAL CORP (DG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DG's revenue growth has slightly outpaced the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 8.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.81% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • DOLLAR GENERAL CORP has improved earnings per share by 16.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DOLLAR GENERAL CORP increased its bottom line by earning $3.50 versus $3.17 in the prior year. This year, the market expects an improvement in earnings ($3.95 versus $3.50).
  • Net operating cash flow has increased to $343.89 million or 36.75% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 6.33%.
  • The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.11 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • You can view the full analysis from the report here: DG Ratings Report