Dollar General Corp (NYSE: DG)

Sector: Consumer Defensive Industry: Discount Stores CIK: 0000029534
Market Cap 32.90 Bn
P/B 4.53
P/E 23.24
P/S 0.83
ROIC (Qtr) 5.81
Div Yield % 1.97
Rev 1y % (Qtr) 4.58
Total Debt (Qtr) 16.51 Bn
Debt/Equity (Qtr) 2.02
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About

Investment thesis

Bull case

  • Operating cash flow of 3.62B provides exceptional 14.82x coverage of interest expenses 244.17M, showing strong debt service capability.
  • Operating cash flow of 3.62B provides strong 43.41x coverage of stock compensation 83.39M, indicating sustainable incentive practices.
  • Robust free cash flow of 2.34B exceeds capital expenditure of 1.28B by 1.84x, indicating strong organic growth funding capability.
  • Robust tangible asset base of 26.18B provides 21.35x coverage of working capital 1.23B, indicating strong operational backing.
  • Free cash flow of 2.34B provides exceptional 9.60x coverage of interest expense 244.17M, showing strong debt service ability.

Bear case

  • Operating cash flow of 3.62B barely covers its investment activities of (1.28B), with a coverage ratio of -2.84, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 1.24B against inventory of 6.65B, the 0.19 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 3.62B provides thin coverage of dividend payments of (519.33M) with a -6.97 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating earnings of 1.89B show weak coverage of depreciation charges of 1.03B, with a 1.84 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 2.34B represents just -2.09x of debt issuance (1.12B), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Product and Service Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Discount Stores
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 WMT Walmart Inc. 1,493.21 Bn 103.91 3.66 68.42 Bn
2 COST Costco Wholesale Corp /New 443.66 Bn 356.36 5.82 8.10 Bn
3 TGT Target Corp 61.67 Bn 21.00 0.82 20.04 Bn
4 DG Dollar General Corp 32.90 Bn 23.24 0.83 16.51 Bn
5 DLTR Dollar Tree, Inc. 27.88 Bn -9.55 1.47 7.66 Bn
6 BJ BJ's Wholesale Club Holdings, Inc. 13.09 Bn 22.76 0.62 2.70 Bn
7 OLLI Ollie's Bargain Outlet Holdings, Inc. 6.85 Bn 30.61 2.70 0.67 Bn
8 PSMT Pricesmart Inc 4.69 Bn 31.14 0.87 0.33 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.59 2.61
EV to Cash from Ops. EV/CFO 15.16 36.59
EV to Debt EV to Debt 3.05 13.49
EV to EBIT EV/EBIT 23.85 37.61
EV to EBITDA EV/EBITDA 16.66 35.41
EV to Free Cash Flow [EV/FCF] EV/FCF 29.69 66.89
EV to Market Cap EV to Market Cap 1.53 1.06
EV to Revenue EV/Rev 1.27 2.05
Price to Book Value [P/B] P/B 4.53 12.39
Price to Earnings [P/E] P/E 23.24 59.65
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.46 2,558.05
Dividend Payout Ratio % Div Payout % (Qtr) 40.70 19.94
Dividend per Basic Share Div per Share (Qtr) 2.36 1.57
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 22.16 21.35
Interest Coverage Int. cover (Qtr) 7.75 12.56
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 14.59 -8.17
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 130.92 36.06
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -7.48
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -5.89 -44.54
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -0.66 0.21
EBIT Growth (1y) % EBIT 1y % (Qtr) -5.40 -49.73
EBT Growth (1y) % EBT 1y % (Qtr) -3.88 -68.31
EPS Growth (1y) % EPS 1y % (Qtr) -4.45 -17.04
FCF Growth (1y) % FCF 1y % (Qtr) 41.94 37.06
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.67 10.99
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.33 1.82
Cash Payout Ratio Cash Payout (Qtr) 0.11 0.07
Cash Ratio Cash Ratio (Qtr) 0.17 0.20
Current Ratio Curr Ratio (Qtr) 1.17 1.14
Debt to Equity Ratio Debt/Equity (Qtr) 2.02 1.24
Interest Cover Ratio Int Coverage (Qtr) 7.75 12.56
Times Interest Earned Times Interest Earned (Qtr) 7.75 12.56
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 6.90 4.61
EBIT Margin % EBIT Margin % (Qtr) 4.49 0.99
EBT Margin % EBT Margin % (Qtr) 3.91 2.30
Gross Margin % Gross Margin % (Qtr) 30.40 24.97
Net Profit Margin % Net Margin % (Qtr) 3.00 1.03