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Dollar General (DG)
NYSE:DG
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Dollar General
(NYSE:DG)68Neutral
Positive Factors
Sales Growth
Dollar General grew net sales by +5.0% YoY to $10.2B, which was 0.5% above consensus.
Strategic Investments
Dollar General is making the right investments to reaccelerate its comparable store sales algorithm back to the historical range.
Negative Factors
Earnings Outlook
Dollar General's earnings per share for the third quarter were lower than expected, mainly due to hurricane-related expenses.
Dollar General (DG) vs. S&P 500 (SPY)
Market Cap
$15.81B
Dividend Yield3.28%
Average Volume (3M)3.30M
Price to Earnings (P/E)11.8
Beta (1Y)0.09
Revenue Growth2.90%
EPS Growth-30.27%
CountryUS
Employees185,800
SectorConsumer Cyclical
Sector Strength53
IndustryRetailers - Staples
Share Statistics
EPS (TTM)6.07
Shares Outstanding219,925,670
10 Day Avg. Volume3,742,277
30 Day Avg. Volume3,301,566
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.39
Price to Cash Flow (P/CF)7.30
P/FCF Ratio19.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$89.25Price Target Upside22.39% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
Dollar General Business Overview & Revenue Model
Company DescriptionBased in Tennessee and founded in 1939, Dollar General Corp. is a discount retailer, which provides various merchandise products including consumable items, seasonal items, home products and apparel, in the southern, southwestern, Midwestern, and eastern United States.
How the Company Makes MoneyDollar General makes money primarily through the sale of a wide range of merchandise at its retail locations. Its revenue model is built on a high-volume, low-margin strategy, where the company leverages its expansive network of stores to sell goods at competitive prices. The company’s key revenue streams include consumables such as food and beverages, cleaning supplies, paper products, and personal care items, which account for the largest portion of its sales. Additionally, Dollar General generates earnings from the sale of seasonal products, home goods, and clothing. The company frequently benefits from strategic partnerships with suppliers and companies that provide branded products sold in its stores. Furthermore, Dollar General's private label brands contribute to its profitability by offering higher margins compared to national brands. The company's ability to maintain low operational costs, efficient supply chain management, and strategic store locations also significantly enhance its profitability.
Dollar General Financial Statement Overview
Summary
Dollar General's financial performance shows steady revenue growth but declining profitability, with a decrease in net profit margins. The balance sheet indicates high leverage risks, although equity is improving. Strong cash flow, evidenced by significant growth in free cash flow, enhances liquidity but overall profitability and leverage need attention.Income Statement
Dollar General's income statement shows moderate revenue growth with a TTM revenue of $40.17 billion compared to $38.69 billion in the previous year, representing a growth rate of approximately 3.96%. The net profit margin declined to approximately 3.32% from 4.29%, indicating a decrease in profitability. Despite a strong gross profit margin of 28.48% in the TTM, the declining EBIT and EBITDA margins at 4.98% and 6.71%, respectively, suggest operational cost pressures.70
Positive
Balance Sheet
The balance sheet shows a high debt-to-equity ratio of 2.39 in the TTM, indicating potential leverage risks. However, the equity has increased to $7.34 billion from $6.75 billion, improving the equity ratio to 23.33% from 21.91% which suggests a strengthening equity position. Return on equity has decreased to 18.19% from 24.62%, reflecting reduced profitability relative to shareholder equity.65
Positive
Cash Flow
Dollar General's cash flow statement highlights a significant improvement in free cash flow, growing from $691.58 million to $1.65 billion, a growth rate of 138.33%. The operating cash flow to net income ratio is 2.35, indicating efficient cash generation relative to net income. The free cash flow to net income ratio is 1.23, suggesting a healthy conversion of earnings into free cash flow despite capital expenditure needs.75
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 40.17B | 38.69B | 37.84B | 34.22B | 33.75B | 27.75B | Gross Profit |
| 11.44B | 11.72B | 11.82B | 10.81B | 10.72B | 8.49B | EBIT |
| 2.00B | 2.45B | 3.33B | 3.22B | 3.55B | 2.30B | EBITDA |
| 2.69B | 3.30B | 4.05B | 3.86B | 4.13B | 2.81B | Net Income Common Stockholders |
| 1.34B | 1.66B | 2.42B | 2.40B | 2.66B | 1.71B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 537.28M | 537.28M | 381.58M | 344.83M | 1.38B | 240.32M | Total Assets |
| 30.80B | 30.80B | 29.08B | 26.33B | 25.86B | 22.83B | Total Debt |
| 18.09B | 18.09B | 17.66B | 14.25B | 13.59B | 11.70B | Net Debt |
| 17.55B | 17.55B | 17.28B | 13.90B | 12.21B | 11.46B | Total Liabilities |
| 24.05B | 24.05B | 23.54B | 20.07B | 19.20B | 16.12B | Stockholders Equity |
| 6.75B | 6.75B | 5.54B | 6.26B | 6.66B | 6.70B |
| Cash Flow | Free Cash Flow | ||||
| 1.65B | 691.58M | 423.97M | 1.80B | 2.85B | 1.45B | Operating Cash Flow |
| 3.14B | 2.39B | 1.98B | 2.87B | 3.88B | 2.24B | Investing Cash Flow |
| -1.49B | -1.69B | -1.56B | -1.07B | -1.02B | -782.49M | Financing Cash Flow |
| -1.48B | -542.07M | -392.46M | -2.83B | -1.71B | -1.45B |
Dollar General Technical Analysis
Negative
72.92
Price Trends
73.32
Negative
75.83
Negative
94.80
Negative
Market Momentum
0.24
Positive
46.08
Neutral
20.35
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DG, the sentiment is Negative. The current price of 72.92 is below the 20-day moving average (MA) of 74.27, below the 50-day MA of 73.32, and below the 200-day MA of 94.80, indicating a bearish trend. The MACD of 0.24 indicates Positive momentum. The RSI at 46.08 is Neutral, neither overbought nor oversold. The STOCH value of 20.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DG.
Dollar General Risk Analysis
Dollar General disclosed 22 risk factors in its most recent earnings report. Dollar General reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Dollar General Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $460.27B | 60.89 | 30.98% | 0.44% | 5.35% | 16.22% | |
73 Outperform | $4.78B | 17.36 | 16.61% | ― | 14.32% | 0.02% | |
73 Outperform | $13.38B | 23.88 | 31.64% | ― | 5.32% | 10.61% | |
72 Outperform | $6.34B | 30.85 | 12.84% | ― | 12.48% | 32.49% | |
68 Neutral | $15.81B | 11.84 | 18.19% | 3.28% | 2.90% | -30.27% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
56 Neutral | $15.67B | ― | -13.67% | ― | 5.19% | -190.36% |
* Consumer Cyclical Sector Average
Performance Comparison
DG
Dollar General
72.92
-78.40
-51.81%
COST
Costco
1,036.87
281.06
37.19%
DLTR
Dollar Tree
66.68
-82.40
-55.27%
FIVE
Five Below
82.70
-122.22
-59.64%
OLLI
Ollie's Bargain Outlet Holding
103.39
27.22
35.74%
BJ
Bj's Wholesale Club Holdings
101.09
27.87
38.06%
Dollar General Earnings Call Summary
Earnings Call Date: Dec 5, 2024 | % Change Since: -7.56% | Next Earnings Date: Mar 13, 2025
Earnings Call Sentiment Neutral
While Dollar General shows some positive trends in market share growth and operational improvements, significant challenges remain, including decreased operating profit, increased shrink, and declining EPS. The company is taking steps to address these issues, but the financial headwinds are notable.Highlights
Market Share Growth
Dollar General grew market share in both dollars and units in highly consumable and non-consumable product sales during Q3.
Positive Customer Traffic
Customer traffic was positive in Q3 and continued to improve into November, indicating early traction from operational changes.
Strong Real Estate Returns
Real estate projects continue to deliver strong performance with new store returns expected to be approximately 18% on average in 2024.
Inventory Reduction Success
Total non-consumable inventory decreased approximately 15% compared to last year and decreased 19% on a per-store basis.
Lowlights
Decreased Operating Profit
Operating profit for the third quarter decreased 41.1% to $433.5 million, with operating profit as a percentage of sales decreasing by 330 basis points.
Increased Shrink
Shrink increased, contributing to a 147 basis point decrease in gross profit as a percentage of sales.
Higher SG&A Costs
SG&A increased by 183 basis points, driven by retail labor costs, depreciation, and professional fees.
Decline in EPS
Earnings per share (EPS) for the quarter decreased 45.9% to $1.26, with an anticipated decline of 34% to 29% for the fiscal year.
Company Guidance
During Dollar General's third-quarter 2023 earnings call, the company provided guidance highlighting several key metrics and strategic actions aimed at improving operational performance. The company reported a 2.4% increase in net sales to $9.7 billion, although same-store sales decreased by 1.3%. The company emphasized a focus on investing approximately $150 million in store labor hours to enhance customer service and inventory management, which is expected to improve retention at the store manager level and reduce shrink. Dollar General plans to optimize its supply chain by better managing inventory within distribution centers and reducing temporary warehouse usage, aiming for higher on-time and in-full delivery rates. The company also discussed SKU rationalization to simplify operations, improve inventory turnover, and lower costs. For fiscal 2023, Dollar General forecasts net sales growth of 1.5% to 2.5%, with same-store sales ranging from a decline of approximately 1% to flat, and EPS between $7.10 and $7.60, representing a decline of 34% to 29%. Capital spending is expected to be between $1.6 billion and $1.7 billion, with no share repurchase activity planned.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.