Dollar General Corp (DG) stock analysis

P/E below its 5-year median

Dollar General's P/E of 17.9 is below its own 5-year median of 18.7.

P/E below the industry

Dollar General's P/E of 17.9 is below the Variety Stores median of 22.5.

EV/EBITDA below its 5-year median

Dollar General's EV/EBITDA of 9.4 is below its 5-year median of 10.7.

P/B below the industry

Dollar General's price-to-book of 3.26 is below the Variety Stores median of 5.57.

Trading below fair value

The share price of $137.44 is below our fair value estimate of $164.22.

Margin of safety under 20%

The price is 16.3% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 4.1% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -13.8% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 43.0% over the last twelve months, against a 5-year average of -10.6% a year.

Growing slower than the industry

Revenue grew 4.8% over the last twelve months; the Variety Stores median is 9.6%.

Guidance raised

Dollar General raised its fiscal 2026 Net sales growth outlook on Aug 27, 2026.

Gross margin improving

Gross margin was 31.2% over the last twelve months, against 30.2% a year earlier.

Return on equity over 15%

Return on equity was 19.7% over the last twelve months and averaged 28.0% over five years.

Return on capital over 10%

Return on invested capital was 15.0%, above the 10% that usually covers the cost of capital.

Return on equity below the industry

Dollar General's return on equity of 19.7% is below the Variety Stores median of 24.9%.

Earnings shrank over 5 years

Net income shrank 10.6% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 3.9% over the last twelve months, against a 5-year average of 4.8%.

Net margin below the industry

Dollar General's net margin of 3.9% is below the Variety Stores median of 4.0%.

High debt

Debt is 49.2% of shareholders' equity, above the 40% we consider low.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 72.6% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.21 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.68; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Dollar General paid dividends worth 1.7% of the share price over the last twelve months.

Yield below Treasuries

The 1.7% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Dollar General yields 1.7%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 30.5% of net income.

Covered by free cash flow

Dividends take 25.9% of free cash flow.