Dollar General 3Q profit beats as traffic improves

NEWS: Dollar General's fiscal third-quarter net income climbed 14 percent as traffic improved and shoppers spent more per transaction on average.

Its earnings topped Wall Street's expectations. The discounter also lifted the low end of its full-year adjusted earnings forecast and boosted its stock repurchase authorization by $1 billion.

The stock rose in morning trading on Thursday, briefly hitting an all-time high.

DETAILS: Sales at stores open at least a year climbed 4.4 percent. This figure is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.

Dollar General reported strong sales of tobacco products, perishables, candy and snacks in the quarter. Seasonal and home product sales were solid, it added.

The company's board approved an additional $1 billion for stock buybacks on Wednesday. This raises the total authorization for future buybacks to $1.2 billion.

NUMBERS: For the period ended Nov. 1, Dollar General Corp. earned $237.4 million, or 74 cents per share. A year earlier it earned $207.7 million, or 62 cents per share. Taking out a benefit from the reversal of income tax reserves, earnings were 72 cents per share.

Revenue increased 11 percent to $4.38 billion from $3.96 billion.

Analysts, on average, expected earnings of 70 cents per share on revenue of $4.42 billion, according to a FactSet poll.

FUTURE: Dollar General now foresees full-year adjusted earnings between $3.18 and $3.22 per share. Its prior outlook was for $3.15 to $3.22 per share. The company narrowed its revenue guidance. It now expects revenue to rise 10 percent to 10.5 percent. Previously, it forecast a 10 percent to 11 percent increase.

Analysts predict full-year earnings of $3.22 per share.

STOCK: The shares gained $3.01, or 5.3 percent, to $59.38 in morning trading after rising as high as $60.25 earlier in the session. FactSet said that was its all-time high.