Business Profile
Dollar General Corporation, a discount retailer, provides various merchandise products in the southern, southwestern, Midwestern, and eastern United States. The company offers consumable products, including paper and cleaning products, such as paper towels, bath tissues, paper dinnerware, trash and storage bags, and laundry products; packaged food comprising cereals, canned soups and vegetables, condiments, spices, sugar, and flour; and perishables that include milk, eggs, bread, refrigerated and frozen food, beer, and wine. Its consumable products also comprise snacks, such as candies, cookies, crackers, salty snacks, and carbonated beverages; health and beauty products, including over-the-counter medicines and personal care products, such as soaps, body washes, shampoos, cosmetics, and dental hygiene and foot care products; pet supplies and pet food; and tobacco products.
Business Growth For The Quarter Ended 2021-01-29
The company reports a huge amount of sales growth of 22% y/y with a gross profit ratio of 31%. Last year, annual sales were equal to $33746. 839 million. DG reports EBITDA growth of 42%, and an EBITDA ratio of 11%. Furthermore, operating income is another beneficial feature of DG. The company’s operating income grows at 48% y/y. I also appreciate that net income grew a 55%. In my view, net income grows since interest expenses declined a -249%.
Balance Sheet As Of 2021-01-29
With an assets to liabilities ratio of more than 1x, DG’s balance sheet looks stable. In Q4, the total amount of assets was equal to $25862 million, with total liabilities of $19201 million. The balance sheet shows deferred revenue of $710 million, which I appreciate. Deferred revenue represents a prepayment by DG’s clients that have yet to be delivered. To sum up, Dollar General Corp receives cash in advance of it being earned. In addition, Dollar General Corp has positive working capital, which shareholders will like. It means that DG can cover its short-term liabilities when they come due.
DG’s short term debt is less significant than the company’s cash and cash equivalents. I believe that Dollar General Corp may not have to worry about any liquidity risk. DG’s debt to equity ratio is below 2x. Hence, the debt level appears to be under control. Note that Dollar General Corp reports cash and cash equivalents of $1376 million, and net debt of $-302 million. With regards to the EV/EBITDA, Dollar General Corp trades at 11. In my view, market participants will most likely appreciate this low figure.
Quarterly Results For The Quarter Ended 2021-01-29
In Q4 DG reported quarterly sales of $33746 million, and gross profit of $2147 million. The gross profit ratio was equal to 31%. Moreover, DG is profitable, which is good. Dollar General Corp released positive quarterly EBITDA of $3978. 617 million. Taking this into account, many money managers will most likely have a look at DG. DG also showed positive net income of $2655. 05 million. The numbers seem useful.
Valuation and Risks
Dollar General Corp has a market capitalization of $49223 million. The enterprise value is equal to $46599 million. With forward sales of $33746 million, DG sells at less than 2x forward sales.
I think that money managers will most likely believe that Dollar General Corp is cheap. Institutional market participants M&R CAPITAL MANAGEMENT, Valley Brook Capital Group, Inc. , and Curi Wealth Management, LLC are Dollar General Corp investors.
Insider Trades
The following DG’s insiders acquired or sold equity recently.DG’s traders will most likely study this information:
+In 2021-04-01, director, officer: Chief Executive Officer VASOS TODD J sold equity of DG.
+In 2021-04-01, officer: Chief Operating Officer Owen Jeffery sold stock of DG.
+In 2021-04-01, officer: EVP & Chief Financial Officer Garratt John W sold equity of DG.
If you see an error, please contact the editor. We don’t own DG’s shares, and this is our opinion. We do not offer a recommendation to buy or sell any stock.
Discussion about this post