04:04 PM EDT, 08/18/2025 (MT Newswires) -- Dollar General's ( DG ) stock price has room for further appreciation, with the discount retailer's second-quarter results expected to show a comparable sales acceleration and an earnings beat, UBS Securities said in a Monday note.

With the stock having advanced about 49% so far this year, investors are probably wondering if the rally is sustainable, UBS analysts, including Michael Lasser, said. "We think (Dollar General ( DG )) offers several reasons to remain bullish on the stock," Lasser wrote.

Dollar General ( DG ) will continue reaping the benefits of initiatives such as store remodels, and is one the best positioned retailers to weather the impact of tariffs, according to Lasser.

UBS expects the company, which is is scheduled to release its fiscal second-quarter results on Aug. 28, to report quarterly earnings per share of $1.63 and comparable sales growth of 2.7%, compared with consensus estimates of $1.57 and 2.6%, respectively. The brokerage anticipates an operating margin compression of 40 basis points to 5%, better than analysts' forecast of 4.8%.

"We think the print will underscore the progress this retailer has been making," Lasser wrote. "We see a slight acceleration in (comparable sales) and ongoing shrink tailwinds helping drive a slight earnings beat."

UBS said Dollar General ( DG ) will either maintain its full-year EPS guidance of $5.20 to $5.80, or raise the mid-point modestly.

"This is because the company will likely look to leave some cushion for the back half of 2025, given the uncertainties related to tariffs and consumer," Lasser said.

The company in June lifted its full-year same-store sales growth outlook as it recorded better-than-expected first-quarter results. Analysts polled by FactSet are currently looking for EPS of $5.80 on revenue of $42.4 billion.

"Longer term, it still has a substantial opportunity to retrace its margins back to the 6-7% area from our estimated 4.5% this year," which is also the consensus view, Lasser said. "We believe it has plenty of arrows in its quiver to make this a reality, including contributions from sales leverage, advertising, and eCommerce."

UBS has a buy recommendation and a $128 price target on the stock.

Price: 112.73, Change: -0.04, Percent Change: -0.04