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Key Takeaways

• Dollar Tree and Dollar General are scheduled to report first-quarter results in the coming days.

• Analysts mostly rate the stocks as a "hold" or "buy," but each has an average price target slightly below current prices.

• UBS analysts said in a recent note that they believe there are "more tailwinds than risks and uncertainties" for dollar stores in the current environment.

Dollar General (DG) and Dollar Tree (DLTR) are set to report their first-quarter results before the opening bell Tuesday and Wednesday, respectively, with analysts staying cautious on the discount retailers' stocks.

Eight analysts tracked by Visible Alpha says Dollar General's stock is a "hold" and five call it a "buy," while five rate Dollar Tree a "hold," four a "buy," and one a "sell." Per Visible Alpha, Dollar General stock has a consensus price target of $95.31 compared with its closing level Friday of $97, while Dollar Tree's price target of $85.40 sits just below its closing price just above $90.

Dollar General is expected to report earnings per share (EPS) of $1.47 on revenue that rose 3.5% year-over-year to $10.26 billion, with a 1.2% bump in comparable-store sales. Meanwhile, Dollar Tree is seen posting adjusted EPS of $1.15 on net sales that increased 9% to $4.53 billion, as well as comparable sales that rose 3.8%.

Analysts See 'More Tailwinds Than Risks' Amid Tariffs, Consumer Uncertainty

UBS analysts said in a recent note that they believe there are "more tailwinds than risks and uncertainties" for dollar stores in the current environment, citing consumers looking to trade down as a key benefit. They also see increased traffic for the stores from the closing of competitors Big Lots and Party City, as well as a potential shift away from online marketplaces like Shein and PDD Holdings' (PDD) Temu as their prices could rise as the de minimis exception goes away.

Analysts from Oppenheimer recently wrote that they "overall expect both players to at least meet consensus expectations" for the first quarter. However, the analysts said they believe Dollar General will affirm its full-year outlook while Dollar Tree may look to cut its guidance due to its greater exposure to imports and discretionary spending, which could be impacted by tariffs.

Last quarter, Dollar General missed profit estimates following a review of its store portfolio that will lead the chain to close nearly 150 namesake and pOpshelf stores. Dollar Tree excluded Family Dollar's performance from its Q4 results, as the company announced an agreement to sell the brand to a pair of private-equity firms for $1 billion.