Dollar General
DG
$127.05
-0.35%
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 a mix of consumables, seasonal items, home products, and apparel, with a significant private label presence. The company targets rural and low-income markets underserved by big-box retailers, positioning itself as a value leader in the discount retail industry. Currently, the stock is in focus due to its recent earnings beat, margin expansion, and raised outlook, which were overshadowed by concerns over slower sales growth and consumer spending pressures. Investors are debating the sustainability of its growth trajectory amid a challenging macroeconomic environment, with recent news highlighting both defensive strength and cautious guidance.…
DG
Dollar General
$127.05
Related headlines
DG 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Dollar General's 12-month outlook, with a consensus price target around $131.41 and implied upside of +3.4% versus the current price.
Average Target
$131.41
0 analysts
Implied Upside
+3.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$90 - $175
Analyst target range
The wide range between the low and high targets ($90 to $175) indicates high uncertainty about Dollar General's future performance. The high target likely assumes successful margin expansion, market share gains, and a favorable consumer environment, while the low target may price in a recessionary impact on discretionary spending and increased competition from Walmart and other discounters. Recent institutional ratings show a mix of Hold and Overweight actions, with no major upgrades or downgrades, suggesting analysts are waiting for more clarity on sales trends. The relatively tight average target relative to the current price suggests that the stock is fairly valued, and investors should look for catalysts such as improved same-store sales or further margin gains to drive upside.
Bulls vs Bears: DG Investment Factors
Dollar General presents a mixed picture: strong margin expansion, a defensive business, and an attractive valuation are countered by sluggish sales growth, high debt, and competitive threats. The bull case rests on the company's ability to sustain margin gains and benefit from trade-down behavior, while the bear case focuses on decelerating revenue and potential earnings disappointments. Currently, the evidence slightly favors the bulls, given the low PEG ratio and raised guidance, but the key tension is whether same-store sales can recover to justify the forward PE. If sales growth accelerates, the stock could re-rate higher; if it stalls, the valuation premium could erode.
Bullish
- Raised FY2026 EPS Guidance: In Q1 2026, Dollar General raised its full-year earnings outlook, signaling confidence in margin expansion and cost controls. The company's EPS of $2.02 beat estimates, and the forward PE of 15.8x implies a 32% earnings growth expectation, supported by a PEG ratio of 0.61.
- Defensive Business Model: With 82% of sales from consumables, Dollar General benefits from steady demand even in economic downturns. The stock's beta of 0.247 indicates low volatility, and recent news highlights that dollar stores are gaining market share as affordability pressures drive consumers to value retailers.
- Margin Expansion Trend: Gross margin improved to 31.6% in Q1 2026 from 30.9% in the prior year quarter, driven by supply chain efficiencies and private label mix. Operating margin also rose to 5.9% from 5.5% year-over-year, indicating successful cost management.
- Attractive Valuation vs. Peers: Trading at a forward PE of 15.8x versus the industry average of 22x, Dollar General offers a 28% discount. The PEG ratio of 0.61 suggests the stock is undervalued relative to its expected growth, making it an appealing value proposition.
Bearish
- Slowing Sales Growth: Revenue growth decelerated to 3.4% YoY in Q1 2026, down from 3.6% in the prior quarter, and management guided to slower sales ahead. Same-store sales have been weak, reflecting cautious consumer spending and increased competition.
- High Debt Levels: Debt-to-equity ratio of 1.85 is elevated, and interest expense of $47 million in Q1 2026 consumes a portion of operating income. This leverage increases financial risk, especially if sales growth stalls or interest rates remain high.
- Valuation Compression Risk: Despite a discount to peers, the stock's 1-year return of +21% has outpaced the S&P 500's +18%, and the 6-month decline of -11% shows volatility. If earnings growth disappoints, the forward PE could contract further, pressuring the stock.
- Competitive Pressures: Walmart and other discounters are aggressively expanding, and Dollar Tree's turnaround is gaining traction. The recent news highlights that dollar stores are winning share, but competition for price-sensitive consumers remains intense, potentially limiting margin expansion.
DG Technical Analysis
Dollar General's stock has exhibited a volatile, range-bound pattern over the past year, with a 1-year price change of +21.1%, but the current price of $127.05 sits at approximately 80% of its 52-week range (between $95.11 low and $158.23 high). This positioning suggests the stock is in the upper half of its range, indicating a recovery from earlier lows but still below its highs, reflecting a mix of optimism and caution. The 6-month price change of -11.4% highlights a significant pullback from the February peak, yet the stock has since rebounded, suggesting a potential base-building phase.
Beta
0.25
0.25x market volatility
Max Drawdown
-34.9%
Largest decline past year
52-Week Range
$95-$158
Price range past year
Annual Return
+21.1%
Cumulative gain past year
| Period | DG Return | S&P 500 |
|---|---|---|
| 1m | +10.3% | +0.3% |
| 3m | +11.0% | +4.0% |
| 6m | -11.4% | +8.3% |
| 1y | +21.1% | +20.2% |
| ytd | -7.1% | +9.6% |
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DG Fundamental Analysis
Dollar General's revenue growth has been modest but steady, with the most recent quarter (Q1 2026) reporting revenue of $10.79 billion, a 3.4% year-over-year increase, and a sequential acceleration from the prior quarter's 2.9% growth. The company's revenue mix is heavily weighted toward consumables (82% of sales), which provides defensive characteristics but limits higher-margin growth. Over the past year, revenue growth has ranged from 2.4% to 3.4%, indicating a stable but slow-growth profile, which is typical for mature discount retailers. The investment case hinges on the company's ability to drive same-store sales growth and expand margins through operational efficiencies.
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 20.9x, while the forward PE is 15.8x, indicating that the market expects earnings growth of approximately 32% over the next year, which is supported by the PEG ratio of 0.61. This gap between trailing and forward multiples suggests that the market is pricing in a significant earnings rebound, likely driven by margin expansion and cost controls. Compared to the industry average PE of 22x (based on available data), Dollar General trades at a slight discount of about 5%, which may be justified by its lower growth prospects relative to some peers.
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 & Operational Risks: Dollar General's high debt-to-equity ratio of 1.85 and interest expense of $47 million in Q1 2026 increase financial leverage, making the company sensitive to interest rate changes. The net margin of 3.5% is thin, leaving little room for cost shocks, and revenue concentration in consumables (82%) limits higher-margin growth opportunities. Cash flow generation is strong, but any prolonged sales decline could strain debt servicing and dividend sustainability.