DG

Based on the provided analysis, here is a comprehensive assessment of Dollar General (DG).

Technical Analysis DG exhibits exceptionally strong bullish momentum, having surged over 53% in the last three months. However, trading near its 52-week high with such parabolic gains suggests the stock is overbought, elevating the risk of a near-term consolidation. The low beta indicates this rally has been unusually stable for its magnitude.

Fundamental Analysis Fundamentally, the picture is mixed. Recent quarterly results show pressure on profitability, with net margins contracting. While the company maintains moderate leverage, liquidity is tight, and operational efficiency metrics like ROE and inventory turnover indicate room for improvement.

Valuation & Risk Valuation sends conflicting signals. An attractive price-to-sales ratio is contrasted by a very high EV/EBITDA, implying the market expects significant future growth. The primary strength is its low-risk profile, characterized by minimal volatility and a manageable historical drawdown.

Buy Recommendation

While DG's recent price performance is impressive and its low volatility is attractive for risk-averse investors, current fundamentals do not fully support the elevated valuation. The stock appears overbought technically, and a period of consolidation is likely before a sustainable upward move. At this level, the risk/reward profile is less favorable for new money. Investors may find a better entry point on a pullback. (*Note: This is not investment advice, for reference only.*)

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis provided, here is a 12-month outlook for Dollar General (DG):

12-Month Outlook for DG

DG's outlook is characterized by a tension between its strong recent momentum and underlying fundamental challenges. A key near-term catalyst will be the company's ability to demonstrate improved operational efficiency and margin stabilization in upcoming earnings reports, which could justify its current valuation. The primary risk is a significant price correction from overbought conditions, as the stock's parabolic rally appears disconnected from its current profitability pressures. Given the mixed signals and elevated valuation, the stock is likely to experience a period of consolidation; a more realistic target range would be in the $130-$160 band, representing a potential for both modest upside and meaningful downside from the current price of $151.25.

Wall Street Consensus

Most Wall Street analysts are optimistic about DG's 12-month outlook, with consensus target around $150.95, indicating expected upside potential.

Overall, DG has investment potential but also faces challenges. Here are key factors to weigh before investing.

Of course. Here is the technical analysis of DG's price performance.

Overall Assessment DG has demonstrated exceptionally strong bullish momentum, particularly over the recent three-month period, significantly outperforming the broader market.

Short-term Performance The stock has surged 53.29% over the last three months, dramatically outpacing the market by nearly 50 percentage points, indicating powerful buying pressure. This outperformance is supported by a strong 14.0% gain over the past month, confirming the continuation of the positive trend. The stock's low beta of 0.262 suggests this substantial move higher has occurred with lower volatility than the overall market, which is atypical for such a sharp rally.

Current Position DG's current price of $151.25 places it near the very top of its 52-week range, just 0.6% below the recent high of $152.09. This proximity to the 52-week high, combined with the parabolic 3-month advance, strongly suggests the stock is in an overbought condition. Given the magnitude of the recent gains and the lack of a significant pullback, the risk of a near-term consolidation or correction is elevated.

Revenue & Profitability DG's Q3 2025 revenue of $10.65 billion declined slightly from Q2's $10.73 billion, while profitability weakened substantially as net profit margin fell from 3.84% to 2.65%. The contraction reflects pressure on operating margins, with operating income ratio dropping from 5.55% to 4.00% quarter-over-quarter, indicating rising cost pressures despite stable gross margins.

Financial Health The company maintains moderate leverage with a debt ratio of 52% and interest coverage of 7.6x, though the low quick ratio of 0.24 signals limited liquid asset coverage for immediate obligations. Operating cash flow to sales of 9.4% provides adequate coverage, but the cash flow to debt ratio of just 6.1% suggests constrained capacity for aggressive debt reduction.

Operational Efficiency DG's operational metrics show room for improvement with ROE at 3.45% and asset turnover of 0.34, indicating suboptimal utilization of both equity and total assets. The inventory turnover of 1.12 and 80+ days inventory outstanding point to slower merchandise rotation, while the 29-day cash conversion cycle reflects efficient working capital management despite inventory challenges.

Based on the provided metrics, DG appears modestly valued on a relative basis despite some concerning indicators. While the trailing PE of 25.65 seems elevated for a value-oriented retailer, the more relevant forward PE of approximately 19.2 suggests improving earnings expectations. The price-to-sales ratio of 0.78 is attractive, but this is offset by a high price-to-book of 4.0 and a very elevated EV/EBITDA of over 53, which signals the market is pricing in significant future cash flow growth. The negative PEG ratio, while unusual, typically indicates that earnings growth projections are negative or that the calculation is anomalous, adding a layer of complexity to the valuation assessment.

A peer comparison is not feasible at this time as the necessary industry average data has not been provided. To conduct a proper relative valuation analysis, benchmark figures for key ratios such as PE, PB, PS, and EV/EBITDA within DG's specific retail segment are required. Without this contextual data, it is impossible to determine whether DG's multiples represent a premium or a discount to its competitors.

Volatility Risk: DG exhibits exceptionally low volatility risk, with a beta of just 0.262 indicating minimal sensitivity to broader market movements. This defensive characteristic is further supported by a relatively moderate one-year maximum drawdown of -17.52%, suggesting manageable peak-to-trough declines during market downturns.

Other Risks: The absence of notable short interest indicates market consensus on DG's stability and reduces the risk of a short squeeze. While this is favorable, an investor should verify underlying liquidity metrics to ensure that trading volumes are sufficient to accommodate larger orders without significant price impact.