About Dollar General
Headquartered in Tennessee, Dollar General (DG) is the largest discount store retailer in the United States in terms of total sales. It clocked $22 billion in sales during fiscal 2016, operating through 13,429 stores in 44 US states (as of March 3, 2017).
The company offers a variety of merchandise, including home products, consumables, and apparel. Its stores offer several national brands like Procter & Gamble, Hanes, and Coca-Cola, as well as Dollar General’s own low-priced private brands. The company follows a small-box format with an average store size of 7,500 square feet. Its stores are primarily concentrated in the southern, southwestern, midwestern, and eastern United States.
Dollar General operates under the motto ‘‘Save time. Save money. Every day!’’ The company’s strong business model has resulted in 36 consecutive quarters of same-store sales growth. However, the growth spree came to a halt in the third quarter of fiscal 2016 as Dollar General, like other retailers, started to face the heat from increasing competition and persistent deflation.
Dollar General is currently trading at a one-year forward price-to-earnings ratio of 15.6x, operating closer to the lower end of its 52-week PE range of 14.3x to 20.3x. It trades at a discount to Dollar Tree (DLTR), TJX Companies (TJX), and Price Smart (PSMT), which are trading at a one-year forward earnings multiples of 17.3x, 19.5x, and 26.6x, respectively.
Investors looking for exposure to Dollar General through ETFs can consider the Consumer Discretionary Select Sector SPDR Fund (XLY), which invests 0.7% of its total holdings in the company.
What’s this series all about?
In this series, we’ll provide a business and financial overview of Dollar General. We will discuss the company’s product offerings, store formats, strategies, and supply chain. We will also look at the company’s growth drivers, bottom-line performance, valuations, stock market performance, and Wall Street recommendations.