DG - Embedded Expectations Analysis - 2021 05 14
Dollar General Corporation (DG:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 25.0x Uniform P/E. At these levels, the market is pricing in expectations for profitability to slightly rise, but management may have concerns about their strategic initiatives, store formats, and POP SHELF's potentialSpecifically, management may lack confidence in their ability to retain new customers and advance their operating priorities and strategic initiatives. In addition, they may have concerns about the impact of storms on store traffic, volatility in comp sales, and the uncertain impact of further stimulus packages. Furthermore, they may be overstating the potential of their new store formats, the capabilities of their high-capacity coolers, and the potential of their POP SHELF concept. Finally, they may be concerned about the sustainability of contributions from DG Fresh and their dry distribution center combination
Dollar General is a discount retailer. The company's consumables products includes paper and cleaning products, packaged food, perishables, snacks, health and beauty, pet, and tobacco products. The company's seasonal products include decorations, toys, batteries, small electronics, greeting cards, stationery, prepaid phones and accessories, gardening supplies, hardware, automotive and home office supplies. The company's home products include kitchen supplies, cookware, small appliances, light bulbs, storage containers, frames, candles, craft supplies and kitchen, bed and bath soft goods. The company's apparel includes casual everyday apparel, as well as socks, underwear, disposable diapers, shoes and accessories.
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