Dollar General Corp
NYSE:DG
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Intrinsic Value
The intrinsic value of one DG stock under the Base Case scenario is 160.79 USD. Compared to the current market price of 82.49 USD, Dollar General Corp is Undervalued by 49%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Dollar General Corp
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Fundamental Analysis
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Dollar General Corp. has carved a unique niche in the retail landscape by offering a convenient shopping experience with a focus on value. Founded in 1939, the company has evolved into one of the largest discount retailers in the United States, with a network of over 17,000 stores across 46 states. Dollar General specializes in providing everyday household items, groceries, and seasonal goods at affordable prices, catering primarily to low- and middle-income shoppers in rural and suburban areas. The company's business model thrives on operational efficiency, keeping overhead costs low while maintaining an impressive inventory turnover, which translates to robust sales growth and profitabilit...
Dollar General Corp. has carved a unique niche in the retail landscape by offering a convenient shopping experience with a focus on value. Founded in 1939, the company has evolved into one of the largest discount retailers in the United States, with a network of over 17,000 stores across 46 states. Dollar General specializes in providing everyday household items, groceries, and seasonal goods at affordable prices, catering primarily to low- and middle-income shoppers in rural and suburban areas. The company's business model thrives on operational efficiency, keeping overhead costs low while maintaining an impressive inventory turnover, which translates to robust sales growth and profitability. As a testament to its resilience, Dollar General has consistently delivered strong financial performance, showcasing an ability to attract and retain customers even during economic downturns.
For investors, Dollar General presents a compelling opportunity rooted in its strategic growth initiatives and expansion plans. The company is aggressively pursuing new store openings and exploring innovative formats to penetrate untapped markets. Additionally, Dollar General is investing in technology and supply chain enhancements to improve customer experience and streamline operations. The retail giant has a track record of returning value to shareholders through dividends and stock buybacks, which enhances investor confidence. Moreover, its focus on necessary consumer goods positions it well to weather economic fluctuations, making it a potentially stable addition to an investment portfolio. Overall, Dollar General's commitment to operational excellence, strategic growth, and consistent profitability paints a promising picture for investors seeking stability and growth in the retail sector.
Dollar General Corporation operates primarily in the discount retail sector, focusing on providing a broad assortment of everyday essentials at low prices. Here are the core business segments of Dollar General:
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Consumables:
- This is the largest segment, encompassing a wide range of products such as food, beverages, cleaning supplies, health and beauty aids, and pet supplies. The focus is on providing staples that customers purchase frequently.
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Seasonal Products:
- Dollar General offers a variety of seasonal items throughout the year, including holiday decorations, summer products, and back-to-school supplies. This segment captures customer interest during specific times of the year.
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Apparel:
- The apparel segment includes clothing, footwear, and accessories for all ages. While this segment is smaller relative to consumables, it helps to attract a diverse customer base.
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Home Products:
- This segment includes a variety of home essentials such as cleaning products, kitchenware, and basic home decor items. The aim is to provide customers with affordable home solutions.
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Health and Beauty Aids:
- This includes personal care products, over-the-counter medications, and health-related items. Dollar General positions this segment to cater to everyday health and hygiene needs.
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Other Merchandise:
- This encompasses a range of miscellaneous products, including electronics, toys, and household goods. These items tend to vary and are often introduced based on trends or customer demand.
Business Strategy
Dollar General's strategy revolves around convenience, value pricing, and accessibility, with an emphasis on small-format stores located in rural and suburban areas. By focusing on a limited, essential assortment of products, Dollar General is able to streamline operations and maintain competitive pricing.
This diverse portfolio allows Dollar General to cater to various customer needs while maintaining a strong focus on low-cost offerings, contributing to its ability to thrive in a competitive retail landscape.
Dollar General Corp (DG) has several unique competitive advantages that help it maintain its position in the discount retail sector. Here are some key advantages:
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Store Format and Location Strategy: Dollar General primarily operates smaller stores located in rural and suburban areas that larger retailers often overlook. This allows them to tap into underserved markets where competition is limited, making it convenient for customers who prefer to shop close to home.
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Low-Cost Operating Model: The company focuses on a low-cost structure, which allows it to keep prices low for consumers. Its stores are typically smaller and require less capital to open and operate compared to larger retailers, which helps in maintaining a lower cost per square foot.
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Efficient Supply Chain: Dollar General has developed a highly efficient supply chain and logistics system that enables quick restocking of its inventory. This efficiency helps the company maintain lower costs and ensure product availability, which is crucial for customer satisfaction.
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Broad Product Range: The company offers a diverse range of products, including groceries, cleaning supplies, household items, and seasonal products, catering to everyday needs. This one-stop shopping experience attracts price-sensitive consumers.
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Strategic Partnerships and Private Labels: Dollar General has been successful in establishing partnerships with various suppliers and introducing private label products, which typically offer higher margins. This strategy allows it to enhance product offerings while maintaining price competitiveness.
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Customer Loyalty and Community Engagement: The brand emphasizes its commitment to the communities it serves. Its engagement in local initiatives and a reputation for convenience foster customer loyalty and attract repeat business.
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Agility and Adaptability: As a smaller retailer compared to giants like Walmart, Dollar General can adapt to market changes more quickly. This agility allows it to respond effectively to customer preferences and economic conditions.
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Digital Initiatives: Investment in technology, including a growing e-commerce presence and digital coupon offerings, helps Dollar General cater to the changing shopping preferences of consumers, especially younger demographics.
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Flexible Store Formats: The ability to adapt store formats based on market demands allows Dollar General to optimize store layouts for different demographics and shopping preferences, enhancing customer experience.
By leveraging these competitive advantages, Dollar General Corp has positioned itself effectively within the retail sector, particularly in reaching cost-conscious consumers during various economic cycles.
Dollar General Corp faces several risks and challenges in the near future that could impact its operations and financial performance:
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Competitive Pressure: The discount retail sector is highly competitive, with other retailers like Dollar Tree, Walmart, and Aldi expanding their market presence. Increased competition can lead to price wars, affecting profit margins.
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Economic Conditions: Economic downturns or fluctuations in consumer spending can impact sales, particularly as Dollar General targets lower-income customers who may be more sensitive to economic changes.
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Supply Chain Disruptions: The ongoing global supply chain issues, exacerbated by the COVID-19 pandemic, can lead to inventory shortages, increased costs, and delays in product availability.
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Labor Shortages: Difficulty in attracting and retaining employees can impact store operations, customer service, and overall efficiency. Rising wage pressures due to labor shortages can also squeeze profit margins.
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Regulatory and Compliance Risks: Changes in laws and regulations related to labor, health and safety standards, or environmental policies can create additional compliance costs and operational challenges.
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Digital Transformation: As e-commerce continues to grow, Dollar General needs to enhance its digital capabilities and integrate online shopping options to meet consumer expectations and maintain competitiveness.
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Inflation: Rising prices for goods and services can affect both consumers’ disposable income and Dollar General’s cost structure. If the company cannot pass costs onto consumers, profit margins may decline.
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Changing Consumer Preferences: Consumers increasingly seek healthier and more sustainable products. Dollar General may need to adapt its inventory and marketing strategies to align with these trends.
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Store Expansion Risks: Dollar General has aggressive plans for store openings. However, overexpansion can lead to underperformance in new locations and higher operating costs, particularly in competitive markets.
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Technological Risks: Cybersecurity threats and data breaches pose risks in an increasingly digital retail environment. Protecting customer data and maintaining trust is critical.
In summary, while Dollar General benefits from a strong market position, these risks and challenges require careful strategic management to navigate effectively in the near future.
Revenue & Expenses Breakdown
Dollar General Corp
Balance Sheet Decomposition
Dollar General Corp
Current Assets | 8.7B |
Cash & Short-Term Investments | 1.2B |
Receivables | 61.5m |
Other Current Assets | 7.4B |
Non-Current Assets | 23.1B |
PP&E | 17.5B |
Intangibles | 5.5B |
Other Non-Current Assets | 61.5m |
Current Liabilities | 7.1B |
Accounts Payable | 3.9B |
Accrued Liabilities | 2.5B |
Other Current Liabilities | 781.4m |
Non-Current Liabilities | 17.4B |
Long-Term Debt | 6.2B |
Other Non-Current Liabilities | 11.2B |
Earnings Waterfall
Dollar General Corp
Revenue
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39.7B
USD
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Cost of Revenue
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-27.9B
USD
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Gross Profit
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11.8B
USD
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Operating Expenses
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-9.7B
USD
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Operating Income
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2.1B
USD
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Other Expenses
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-693.6m
USD
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Net Income
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1.4B
USD
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Free Cash Flow Analysis
Dollar General Corp
USD | |
Free Cash Flow | USD |
Dollar General reported a 4.2% increase in net sales to $10.2 billion for Q2 but faced a 20.2% decline in EPS to $1.70. Gross profit margin dropped by 112 basis points to 30% due to increased markdowns and inventory damages. The company revised its 2024 guidance, projecting net sales growth of 4.7% to 5.3% and same-store sales growth of 1% to 1.6%. Despite ongoing challenges, Dollar General is committed to its back-to-basics strategy, expecting EPS to range between $5.50 and $6.20 for the year.
What is Earnings Call?
DG Profitability Score
Profitability Due Diligence
Dollar General Corp's profitability score is 54/100. The higher the profitability score, the more profitable the company is.
Score
Dollar General Corp's profitability score is 54/100. The higher the profitability score, the more profitable the company is.
DG Solvency Score
Solvency Due Diligence
Dollar General Corp's solvency score is 47/100. The higher the solvency score, the more solvent the company is.
Score
Dollar General Corp's solvency score is 47/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
DG Price Targets Summary
Dollar General Corp
According to Wall Street analysts, the average 1-year price target for DG is 103.23 USD with a low forecast of 87.87 USD and a high forecast of 134.4 USD.
Dividends
Current shareholder yield for DG is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
DG Insider Trading
Buy and sell transactions by insiders
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Profile
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Dividend Yield
Description
Dollar General Corp. engages in the operation of merchandise stores. The company is headquartered in Goodlettsville, Tennessee and currently employs 163,000 full-time employees. The company went IPO on 2009-11-13. The firm offers merchandise, including consumable items, seasonal items, home products and apparel. Its merchandise includes brands from manufacturers, as well as its own private brand selections with prices at discounts to brands. Its consumables category includes paper and cleaning products, packaged food, perishables, snacks, health and beauty, pet, and tobacco products. Its seasonal products include holiday items, toys, batteries, small electronics, greeting cards, stationery, prepaid phones and accessories, gardening supplies, hardware, automotive and home office supplies. Its home products include kitchen supplies, cookware, small appliances, light bulbs, storage containers, frames, candles, craft supplies and kitchen, bed and bath soft goods. Its apparel products include casual everyday apparel for infants, toddlers, girls, boys, women and men, as well as socks, underwear, disposable diapers, shoes and accessories.
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IPO
Employees
Officers
The intrinsic value of one DG stock under the Base Case scenario is 160.79 USD.
Compared to the current market price of 82.49 USD, Dollar General Corp is Undervalued by 49%.