Dollar General Corp.
DG
$119.74
+2.19%
Dollar General Corp. is the largest dollar store operator in the United States, operating over 20,000 small-box discount stores. It is a dominant player in the discount retail industry, with a core advantage in serving rural and low-income markets underserved by larger retailers.
DG
Dollar General Corp.
$119.74
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Investment Opinion: Should I buy DG Today?
Based on a synthesis of the data, the objective assessment is a Hold. The stock is not a clear buy due to the pronounced near-term headwinds from its growth guidance and high debt. However, it is also not a compelling sell given its defensive business model, strong cash flow, and valuation that appears to be pricing in significant pessimism. Investors should wait for more clarity on the growth trajectory or a more attractive entry point before considering a Buy rating.
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DG 12-Month Price Forecast
The AI assessment is neutral with medium confidence. The significant negative price reaction to guidance has likely priced in near-term risks, creating a balanced risk/reward profile. The strong fundamentals (FCF, ROE) provide a floor, but the debt load and growth concerns limit upside potential in the near term.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Dollar General Corp.'s 12-month outlook, with a consensus price target around $155.66 and implied upside of +30.0% versus the current price.
Average Target
$155.66
4 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
4
covering this stock
Price Range
$96 - $156
Analyst target range
Analyst consensus data on target price and ratings distribution is not provided in the inputs. The institutional ratings show recent actions from firms like Guggenheim (Buy), Telsey Advisory Group (Market Perform), and Piper Sandler (Neutral). However, without a consolidated summary of targets and ratings, there is no sufficient analyst coverage data available for a detailed consensus view.
Bulls vs Bears: DG Investment Factors
Dollar General presents a mixed picture. Strong profitability recovery and cash generation are offset by a high debt load and a concerning growth outlook that has triggered a significant recent sell-off. The stock's current valuation appears reasonable, but near-term sentiment is negative.
Bullish
- Strong Profitability Recovery: Net income margin more than doubled YoY to 3.91%, showing operational improvement.
- Robust Free Cash Flow: Generated $3.08B in TTM FCF, providing financial flexibility for dividends and growth.
- Defensive Business Model: Discount retail serves low-income markets, offering resilience in economic downturns.
- Attractive Valuation Multiples: Forward P/E of 14.9 and P/S of 0.74 suggest potential undervaluation.
Bearish
- Slowing Growth Outlook: Recent news highlights disappointing sales growth guidance for the coming year.
- High Debt Burden: Debt-to-equity ratio of 1.85 indicates significant financial leverage.
- Recent Sharp Price Decline: Stock down 24% in past month, underperforming S&P 500 by ~19%.
- Modest Revenue Growth: Latest quarterly revenue grew only 5.9% YoY, indicating limited top-line expansion.
DG Technical Analysis
The stock's overall trend over the past six months has been volatile but positive, with a 17.09% gain. However, recent performance has been sharply negative, with the stock down 24.01% over the past month and 10.57% over the past three months, significantly underperforming the S&P 500. The current price of $118.73 sits near the lower end of its 52-week range of $84.70 to $158.23, representing a significant pullback from recent highs.
Beta
0.22
0.22x market volatility
Max Drawdown
-25.0%
Largest decline past year
52-Week Range
$85-$158
Price range past year
Annual Return
+32.7%
Cumulative gain past year
| Period | DG Return | S&P 500 |
|---|---|---|
| 1m | -21.8% | -3.6% |
| 3m | -12.5% | -4.0% |
| 6m | +19.5% | -2.0% |
| 1y | +32.7% | +16.2% |
| ytd | -12.5% | -3.8% |
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DG Fundamental Analysis
Revenue growth has been modest, with the latest quarterly revenue of $10.91 billion showing 5.89% year-over-year growth. Profitability has improved significantly, with the net income margin for the latest quarter at 3.91%, a substantial recovery from 1.86% a year prior. The company's financial health shows a high debt-to-equity ratio of 1.85, but it maintains a positive current ratio of 1.13 and generated robust free cash flow of $3.08 billion over the trailing twelve months. Operational efficiency metrics are mixed, with a Return on Equity (ROE) of 17.77% indicating decent shareholder returns, while the asset turnover suggests moderate efficiency in using assets to generate sales.
Quarterly Revenue
$10.9B
2026-01
Revenue YoY Growth
+0.05%
YoY Comparison
Gross Margin
+0.30%
Latest Quarter
Free Cash Flow
$3.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is DG Overvalued?
Given the company's positive net income, the primary valuation metric is the Price-to-Earnings (P/E) ratio. The trailing P/E ratio is 20.87, while the forward P/E is 14.88, suggesting the market expects earnings growth. The Price-to-Sales (P/S) ratio is 0.74, and the Enterprise Value-to-Sales (EV/Sales) is 0.95, which appear low relative to historical levels. Peer comparison data is not available in the provided inputs.
PE
20.9x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 13x~28x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.2x
Enterprise Value Multiple
Investment Risk Disclosure
The primary risk is execution on growth, as the company has signaled slower sales growth ahead, which could pressure the stock further if realized. Financial risk is elevated due to a high debt-to-equity ratio of 1.85, which increases vulnerability to rising interest rates and economic stress. Competitive and consumer spending risks persist, as the discount retail sector is highly competitive and reliant on low-income consumers who are sensitive to economic cycles. The stock's high short ratio of 2.68 indicates significant bearish sentiment, which could lead to continued volatility, especially if quarterly results disappoint against the newly lowered expectations.
FAQ
The key risks include: 1) Execution risk on growth, as the company has guided for slower sales. 2) Financial risk from a high debt-to-equity ratio of 1.85. 3) Competitive and consumer spending risks in the low-income demographic. 4) Sentiment risk, evidenced by a high short ratio of 2.68 and recent severe underperformance versus the market.
The 12-month outlook is mixed with a base case target range of $115 to $135, implying modest upside from the current ~$119. The bull case (25% probability) sees a re-rating to $145-$158 if execution improves, while the bear case (20% probability) could see a drop to $85-$105 if growth deteriorates further. The consensus view is for consolidation around current levels as the company navigates its growth transition.
Based on traditional metrics, DG appears fairly valued to slightly undervalued. Its forward P/E of 14.9 is below its trailing P/E of 20.9, indicating expected earnings growth. The Price-to-Sales ratio of 0.74 is also low historically. However, this valuation reflects the market's discount for its slower growth outlook and financial leverage, suggesting it is not deeply undervalued.
DG is not a clear buy at this moment. While its valuation looks reasonable with a forward P/E of 14.9 and strong free cash flow, the stock faces significant near-term headwinds from disappointing growth guidance and high debt. It may be suitable for very patient, value-focused investors who can tolerate volatility, but most should wait for more positive momentum or a lower entry point.
DG is more suitable for a long-term investment horizon. The short-term outlook is clouded by growth concerns and volatility. A long-term view allows investors to benefit from the company's defensive market position, scale, and potential for operational improvements to compound. Short-term traders face significant headline risk and sentiment-driven price swings.