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Dollar General Corp DG

Morningstar Rating
$147.78 −6.59 (4.27%)
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Company Report

Financial Recovery Likely to Take Time at Dollar General Amid Soft Demand From Low-Income Shoppers

Dollar General’s over 20,000 small-box locations make the retailer an omnipresent force in rural communities that lack national retail chains. The firm provides low-income households (a typical Dollar General customer earns around $40,000 per year) with a convenient fill-in shopping destination and reasonable price points on merchandise, which we view as the crux of its value proposition. Since thinly populated and less affluent towns cannot economically support an abundance of retailers, Dollar General thrives by leaning into areas with minimal competition. Furthermore, its impressive scale and proximity to consumers, product mix that is 80% consumables, and small basket size (usually around $15) help insulate the retailer from e-commerce competition.

Price vs Fair Value

DG is trading at a 2% premium.
Price
$147.78
Fair Value
$992.00
Uncertainty
Medium
1-Star Price
$829.41
5-Star Price
$343.90
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Dollar General is insulated from intense retail competition by its positioning in thinly populated rural towns, which are largely unattractive for most competing retail banners.

Bears

The dollar store footprint looks crowded today—Dollar General, Dollar Tree, and Family Dollar account for over 37,000 storefronts—which could weigh on opportunities to drive growth via store expansion.

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News

Trading Information

Previous Close Price
$154.37
Day Range
$147.46153.82
52-Week Range
$101.09222.99
Bid/Ask
$147.49 / $148.00
Market Cap
$32.46 Bil
Volume/Avg
2.5 Mil / 2.5 Mil

Key Statistics

Price/Earnings (Normalized)
20.45
Price/Sales
0.88
Dividend Yield (Trailing)
1.53%
Dividend Yield (Forward)
1.53%
Total Yield
1.53%

Company Profile

With over 20,000 locations, Dollar General’s banner is nearly ubiquitous across the rural United States. Dollar General serves as a convenient shopping destination for fill-in store trips, with its value proposition most relevant to consumers in small communities with a dearth of shopping options. The retailer operates a frugal store of about 7,500 square feet and primarily offers an assortment of branded and private-label consumable items (80% of net sales) such as paper and cleaning products, packaged and perishable food, tobacco, and health and beauty items at low prices. Dollar General also offers a limited assortment of seasonal merchandise, home products, and apparel. The firm sells most items at a price point of $10 or lower.
Sector
Consumer Defensive
Industry
Discount Stores
Stock Style Box
Mid Core
Total Number of Employees
170,000

Competitors

Valuation

Metric
DG
DLTR
TGT
Price/Earnings (Normalized)
20.4521.8219.22
Price/Book Value
5.033.845.90
Price/Sales
0.880.920.74
Price/Cash Flow
12.4912.6610.48
Price/Earnings
DG
DLTR
TGT

Financial Strength

Metric
DG
DLTR
TGT
Quick Ratio
0.100.150.27
Current Ratio
1.191.310.91
Interest Coverage
7.49−8.2611.55
Quick Ratio
DG
DLTR
TGT

Profitability

Metric
DG
DLTR
TGT
Return on Assets (Normalized)
5.65%5.59%8.02%
Return on Equity (Normalized)
27.47%15.04%35.66%
Return on Invested Capital (Normalized)
8.10%7.27%15.13%
Return on Assets
DG
DLTR
TGT
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Discount Stores Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
WMT
Walmart IncJlspvlkShhlt$488.5 Bil
COST
Costco Wholesale CorpHjptktlfxMngw$324.8 Bil
TGT
Target CorpTspdskxkkQdrxs$76.7 Bil
WMMVY
Wal - Mart de Mexico SAB de CV ADRDqdx$70.2 Bil
WMMVF
Wal - Mart de Mexico SAB de CVVmdm$70.2 Bil
DLTR
Dollar Tree IncMwhcygtmSgrp$27.3 Bil
DLMAF
Dollarama IncTpvrg$22.8 Bil
DQJCF
Pan Pacific International Holdings CorpXbmd$15.5 Bil
DQJCY
Pan Pacific International Holdings Corp ADRYpjjh$15.5 Bil

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