Dollar General
DG
$123.41
+2.35%
Dollar General Corp. is the largest dollar store operator in the United States, operating over 20,000 small-box discount stores across 48 states, offering consumables, seasonal items, home products, and apparel, with a strong focus on rural and low-income markets. The company distinguishes itself through its extensive private label offerings and extreme value proposition, competing directly with Walmart and other discount retailers. Currently, the stock is under scrutiny as investors weigh the company's margin improvements and raised earnings outlook against softer sales growth and a cautious consumer environment, with recent headlines highlighting both the defensive appeal of discount retail and concerns about slowing momentum.…
DG
Dollar General
$123.41
Related headlines
Investment Opinion: Should I buy DG Today?
We rate DG as a Buy, anchored by a consensus 'buy' recommendation and an average analyst target of $131.90, implying 7% upside from the current price of $123.28. The thesis is that margin expansion and a low PEG ratio of 0.61 will drive EPS growth, making the stock undervalued at its forward PE of 15.35.
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DG 12-Month Price Forecast
The AI assessment leans bullish due to the compelling valuation and margin expansion, but confidence is medium given the decelerating revenue growth and high debt. The stock appears undervalued on a forward basis, and if the company can sustain its margin improvements, there is significant upside. However, if sales growth stalls, the thesis weakens. Key developments to watch include quarterly same-store sales and margin trends; an upgrade to high confidence would require revenue growth acceleration, while a downgrade would occur if margins contract or debt levels rise further.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Dollar General's 12-month outlook, with a consensus price target around $131.90 and implied upside of +6.9% versus the current price.
Average Target
$131.90
0 analysts
Implied Upside
+6.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$90 - $175
Analyst target range
The target price range spans from a low of $90.00 to a high of $175.00, indicating a wide dispersion of expectations. The high target of $175.00 suggests that some analysts anticipate a significant recovery, possibly driven by margin expansion, successful private label growth, or a stronger consumer spending environment. The low target of $90.00 implies concerns about competitive pressures, potential margin compression, or a prolonged downturn in consumer spending. The wide spread between the low and high targets (94.4% difference) signals high uncertainty about the company's future performance, which is typical for a retailer facing structural challenges. Recent institutional ratings show no major upgrades or downgrades, with most firms maintaining their previous stances, suggesting a stable but cautious outlook.
Bulls vs Bears: DG Investment Factors
Dollar General presents a mixed picture: strong margin expansion and a compelling valuation (PEG 0.61, forward PE 15.35) are offset by decelerating revenue growth and high leverage. The bull case is supported by raised earnings guidance and defensive characteristics, while the bear case centers on sales momentum and competitive pressures. Currently, the evidence slightly favors the bull case given the attractive valuation and margin improvements, but the key tension is whether margin gains can sustain EPS growth in the face of slowing sales. If revenue growth fails to reaccelerate, the stock could remain range-bound, but if margins continue to expand, the forward PE suggests significant upside.
Bullish
- Attractive Valuation with PEG of 0.61: The PEG ratio of 0.61 suggests the stock is undervalued relative to its expected earnings growth, which is a strong value signal. This is supported by a forward PE of 15.35 versus a trailing PE of 20.88, indicating the market expects meaningful EPS growth ahead.
- Margin Expansion Driving Profit Growth: Gross margin improved to 31.62% in Q1 2026 from 30.96% in Q1 2025, and operating margin rose to 5.92% from 5.52% year-over-year. This margin expansion, driven by supply chain efficiencies and private label mix, helped EPS grow to $2.02 from $1.78, a 13.5% increase.
- Raised Earnings Outlook: The company raised its full-year earnings guidance, as highlighted in recent news, reflecting confidence in continued margin gains despite softer sales. This positive revision supports the forward EPS estimate of $10.155, which underpins the attractive forward PE.
- Defensive Business Model with Low Beta: With a beta of 0.235, DG offers significant downside protection in volatile markets, as its discount retail model benefits from trade-down behavior during economic downturns. The stock's 1-year return of +7.48% outperformed the S&P 500's -12.89% relative strength, demonstrating resilience.
Bearish
- Decelerating Revenue Growth: Revenue growth slowed to 3.36% YoY in Q1 2026, down from 4.8% in the prior quarter, indicating a deceleration trend. This is concerning given the company's heavy reliance on consumables (82.4% of sales), which face intense price competition from Walmart and other discounters.
- High Debt Levels: Debt-to-equity ratio stands at 1.85, indicating significant leverage that could strain cash flows if interest rates remain elevated. Interest expense of $47.2 million in Q1 2026 consumes a notable portion of operating income, reducing financial flexibility.
- Weak Relative Strength vs. Market: Despite a 3-month rebound of +20.41%, DG's 6-month return is -19.86%, and its relative strength versus the S&P 500 is -33.73% over 6 months and -23.75% YTD. This underperformance suggests persistent selling pressure and a lack of institutional conviction.
- Cautious Consumer Spending Outlook: Recent news indicates that investors focused on sales that slightly missed estimates, and the company signaled slower growth ahead. With a cautious consumer environment and potential tariff impacts, same-store sales growth may remain subdued, limiting top-line expansion.
DG Technical Analysis
Dollar General's stock has experienced a volatile year, with a 1-year price change of +7.48%, yet it remains well below its 52-week high of $158.23, currently trading at $123.28, which is approximately 78% of the 52-week range (with a low of $95.11). This positioning suggests the stock is in a recovery phase after a significant drawdown, but it has not yet reclaimed its prior highs, indicating lingering bearish sentiment. The 6-month price change of -19.86% highlights the severity of the earlier decline, while the 3-month change of +20.41% shows a strong rebound, placing the stock in a consolidation-to-recovery pattern.
Beta
0.23
0.23x market volatility
Max Drawdown
-34.9%
Largest decline past year
52-Week Range
$95-$158
Price range past year
Annual Return
+9.7%
Cumulative gain past year
| Period | DG Return | S&P 500 |
|---|---|---|
| 1m | +2.6% | +2.5% |
| 3m | +16.8% | +2.7% |
| 6m | -18.1% | +11.1% |
| 1y | +9.7% | +20.5% |
| ytd | -9.8% | +12.3% |
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DG Fundamental Analysis
Dollar General's revenue trajectory shows modest growth, with the most recent quarter (Q1 2026) reporting revenue of $10.79 billion, a 3.36% year-over-year increase from $10.44 billion in Q1 2025. This growth is consistent with the prior quarter's 4.8% increase, indicating stable but decelerating sales expansion. The company's revenue segments are dominated by consumables, which account for $8.89 billion (82.4% of total), while seasonal, home products, and apparel contribute smaller portions, reflecting the core value proposition. The modest growth rate suggests a mature business facing competitive pressures and a cautious consumer, but the stability provides a defensive investment characteristic.
Quarterly Revenue
$10.8B
2026-05
Revenue YoY Growth
+3.4%
YoY Comparison
Gross Margin
31.6%
Latest Quarter
Free Cash Flow
$2.9B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is DG Overvalued?
Given that Dollar General is profitable, the primary valuation metric selected is the price-to-earnings (PE) ratio. The trailing PE is 20.88, while the forward PE is 15.35, indicating that the market expects earnings growth, as the forward multiple is lower. The gap between trailing and forward PE suggests an anticipated improvement in earnings per share, which is supported by the estimated EPS of $10.155 for the next fiscal year, up from the current EPS of $2.02 for the latest quarter. This forward-looking optimism is also reflected in the PEG ratio of 0.61, which suggests the stock is undervalued relative to its expected growth rate.
PE
20.9x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 13x~28x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are elevated due to a debt-to-equity ratio of 1.85, which is high for a retailer and increases vulnerability to rising interest rates. Interest expense of $47.2 million in Q1 2026 represents about 7.4% of operating income, and with a current ratio of 1.13, liquidity is tight. The company's net margin of 3.54% is thin, leaving little room for error if costs rise or sales decline. Additionally, free cash flow of $2.89 billion TTM is positive but could be pressured by debt servicing and capital expenditures for new stores and renovations.