Beat the drums and let the trumpets blare. Discount retailer Dollar General (NYSE:DG) forms up to report its Q4 and full-year 2005 results tomorrow morning. Will investors give it a medal or a dishonorable discharge from their portfolios? In just a few hours, we'll find out. In the meantime, let's take a look at a few numbers that might inform their decision.

Wall Street Wisdom:

  • General consensus. Sixteen analysts follow Dollar General. Five of them call the stock a buy, one rates it a sell, and the rest counsel holding it.
  • Revenues. Wall Street believes that Dollar General grew its quarterly revenues 13% in comparison to Q4 2004, to $2.48 billion.
  • Earnings. Profits are expected to come in nearly 20% higher, at $0.49 per share.

Margin watch:
After rising a little toward the end of 2004, Dollar General's margins have reversed and begun marching downward. Last quarter marked the fourth consecutive decline in rolling gross, operating, and net margins for the discount retail chain. As a result, the company is now about 9% less profitable on a net basis than it was one year ago. Investors will want to watch this trend to see whether it reverses tomorrow.

Margins %

7/04

10/04

1/05

4/05

7/05

10/05

Gross

29.5

29.2

29.5

29.3

29.2

28.8

Op.

7.3

6.9

7.3

7.0

6.9

6.6

Net

4.4

4.2

4.5

4.3

4.3

4.1
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

Foolish lookout:
The company has already matched analyst expectations for quarterly sales, reporting in February that its Q4 retail sales came in at $2.5 billion. Although that's 14% better than Dollar General managed in Q4 2004, it's worth pointing out that Q4 2005 was a 14-week-long quarter, whereas Q4 2004 had only 13 weeks in it, meaning that about 8% of the sales increase can be attributed to the time frame.

Meanwhile, the firm is mimicking the success of rival and Motley Fool Inside Value pick Dollar Tree (NASDAQ:DLTR) in keeping its inventories in check. Sales so far this year are up 12% versus last year, but inventories rose only 6% in Q2 and 1% in Q3. This speaks well of the product mix that Dollar Tree is choosing to stock on its shelves, and investors will want to ensure that this continues.

Competitors:
In addition to Dollar Tree, Dollar General faces off against rivals 99 Cents Only (NYSE:NDN) and Family Dollar (NYSE:FDO) in the "dollar" space in particular, and it competes less directly against Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) in attracting budget-minded customers.

Dollar Tree is an Inside Value pick. Take the newsletter dedicated to picking up top-shelf companies at bargain-basement prices for a 30-day free spin.

Fool contributor Rich Smith does not own shares of any company named above.