Dollar General
DG
$125.75
-1.11%
Dollar General Corp. operates the largest dollar store chain in the United States, with over 20,000 small-box discount stores across 48 states, offering consumables, seasonal items, home products, and apparel. The company dominates rural and low-income markets underserved by big-box retailers, leveraging a vast store network and a high mix of private-label products to drive customer traffic. Current investor attention centers on Dollar General's ability to sustain margin recovery and earnings growth amid a challenging consumer environment, as recent quarterly results showed strong profit gains but slightly missed sales estimates, while the stock has rebounded over 15% in the past month from its 52-week low.…
DG
Dollar General
$125.75
Related headlines
Investment Opinion: Should I buy DG Today?
Rating: Buy. Dollar General is a compelling value play given its margin recovery, low forward P/E of 15.7x (29% discount to industry), and PEG ratio of 0.61x, which suggests undervaluation relative to earnings growth. The consensus analyst rating is Buy with an average target of $130.90, implying 4.1% upside.
Supporting evidence: The trailing P/E of 20.9x is at a 5% discount to the industry average of 22x, while the forward P/E of 15.7x represents a 29% discount. Revenue grew 3.4% YoY in Q1 2026, and gross margin expanded 70 bps to 31.6%. Free cash flow of $365 million in Q1 supports dividend payments and debt reduction. The PEG ratio of 0.61x indicates the stock is undervalued relative to its expected EPS growth of ~33% (implied by the gap between trailing and forward P/E).
Risks & Conditions: The biggest risks are further revenue deceleration and margin compression. If revenue growth falls below 2% or gross margin declines below 30%, the thesis would weaken. This Buy would upgrade to Strong Buy if the stock pulls back to $110 (near the lower end of its range) or if forward P/E compresses below 14x. It would downgrade to Hold if revenue growth decelerates below 2% or if debt-to-equity rises above 2.0. Overall, the stock appears undervalued relative to its growth prospects and industry peers.
Sign up to view all
DG 12-Month Price Forecast
Dollar General's attractive valuation (forward P/E 15.7x, PEG 0.61x) and margin recovery provide a solid foundation for upside, but decelerating revenue growth tempers conviction. The base case of 3-4% revenue growth and stable margins supports a price target near $130, offering modest upside. A bullish stance is warranted given the valuation discount and defensive business model, but confidence is medium due to macro uncertainty. Upgrades would require evidence of revenue acceleration or further margin expansion; downgrades would follow sustained deceleration or margin compression.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Dollar General's 12-month outlook, with a consensus price target around $130.90 and implied upside of +4.1% versus the current price.
Average Target
$130.90
0 analysts
Implied Upside
+4.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$90 - $175
Analyst target range
Dollar General is covered by 29 analysts, with a consensus recommendation of 'Buy' (mean rating 2.45 on a 1-5 scale where 1 is Strong Buy). The average price target of $130.90 implies approximately 4.1% upside from the current price of $125.75, reflecting cautious optimism. The distribution leans bullish, with no 'Sell' ratings among recent institutional actions, though several firms maintain 'Hold' or 'Neutral' stances, indicating a balanced view. The target range spans from a low of $90.00 to a high of $175.00, a wide spread of $85 that underscores high uncertainty. The low target of $90 assumes significant downside from current levels, potentially pricing in a recessionary impact on low-income consumers or margin compression, while the high target of $175 implies a 39% upside, likely factoring in successful margin recovery and accelerated store growth. Recent analyst actions show no downgrades, with firms like Barclays and Evercore ISI maintaining positive ratings, suggesting stability in sentiment. The wide target range signals divergent views on the company's ability to navigate macro headwinds, making the stock a high-conviction bet for those with a strong view on consumer spending trends.
Drowning in data?
Find the real signal!
Bulls vs Bears: DG Investment Factors
Dollar General presents a mixed picture: margin recovery and attractive forward valuation (PEG 0.61x, forward P/E 15.7x) support a bullish case, while decelerating revenue growth and high debt (D/E 1.85) temper enthusiasm. The bull case currently has stronger evidence given the margin expansion and low PEG ratio, but the single most important tension is whether revenue growth can stabilize or re-accelerate. If top-line momentum improves, the stock could re-rate toward the industry average P/E, offering substantial upside. Conversely, if growth continues to decelerate, the stock may remain range-bound or test its 52-week low.
Bullish
- Margin Recovery Driving Earnings Growth: Gross margin improved to 31.6% in Q1 2026 from 30.9% a year ago, and operating margin expanded to 5.9% from 5.5%. This margin expansion drove net income up 13% YoY to $444 million, demonstrating operating leverage.
- Undervalued on Forward P/E and PEG: Forward P/E of 15.7x is a 29% discount to the discount store industry average of ~22x, and the PEG ratio of 0.61x suggests the stock is undervalued relative to its expected earnings growth. This implies significant upside if the market re-rates the stock.
- Strong Free Cash Flow Generation: Dollar General generated $365 million in free cash flow in Q1 2026 alone, with a trailing free cash flow of $2.89 billion. The free cash flow yield of 1.2% supports dividend payments and debt servicing, providing financial flexibility.
- Consensus Buy Rating with Upside Potential: 29 analysts rate the stock a Buy on average, with a mean price target of $130.90, implying 4.1% upside from the current price of $125.75. The high target of $175 suggests 39% upside in a bullish scenario.
Bearish
- Decelerating Revenue Growth Trend: Revenue growth slowed to 3.4% YoY in Q1 2026 from 4.5% in Q2 2025 and 7.3% in Q1 2025. This deceleration reflects normalization after pandemic surges and persistent pressure on low-income consumers, raising concerns about top-line momentum.
- High Debt-to-Equity Ratio: Debt-to-equity of 1.85 is elevated, indicating significant leverage. While manageable given consistent cash flow, it increases financial risk if interest rates remain high or if earnings decline, potentially constraining share repurchases and store expansion.
- Wide Analyst Target Range Signals Uncertainty: Analyst targets range from $90 to $175, a spread of $85 (68% of current price). This wide dispersion reflects deep uncertainty about the company's ability to navigate macro headwinds, making the stock a high-conviction bet.
- Net Margin Below Industry Average: Net margin of 4.1% is below the discount store industry average, indicating room for improvement but also vulnerability to cost pressures. Any reversal in margin gains could compress earnings and the stock's valuation.
DG Technical Analysis
Dollar General's 1-year price change of +15.1% masks a volatile trajectory, with the stock currently trading at $125.75, approximately 79% of its 52-week range ($95.11 to $158.23). This positioning near the lower end of the range suggests the stock is in a recovery phase from its March 2026 lows, but still well below its highs, indicating lingering bearish sentiment and potential value opportunity if fundamentals support a rebound. The 52-week high of $158.23 represents a key resistance level, while the low of $95.11 serves as critical support.
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
+15.1%
Cumulative gain past year
| Period | DG Return | S&P 500 |
|---|---|---|
| 1m | +15.7% | -0.5% |
| 3m | -0.7% | +4.9% |
| 6m | -15.5% | +9.7% |
| 1y | +15.1% | +18.4% |
| ytd | -8.1% | +9.0% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
DG Fundamental Analysis
Dollar General's revenue trajectory shows steady but decelerating growth: Q1 2026 revenue of $10.79 billion grew 3.4% YoY, down from 4.5% growth in Q2 2025 and 7.3% in Q1 2025. The consumables segment, which accounts for 82% of sales, drove the top line, while seasonal and home products contributed modestly. The deceleration reflects a normalization after pandemic-era surges and ongoing pressure on low-income consumers, but the company's focus on value and private-label penetration supports resilient demand. Net income in Q1 2026 was $444 million, up from $392 million in the prior-year quarter, with diluted EPS of $2.00 versus $1.78, demonstrating earnings leverage. Gross margin improved to 31.6% from 30.9% a year ago, driven by supply chain efficiencies and favorable product mix, while operating margin expanded to 5.9% from 5.5%. The company remains solidly profitable with a net margin of 4.1%, though this is below the industry average for discount retailers, indicating room for further operational improvement. Dollar General generated $716 million in operating cash flow and $365 million in free cash flow in Q1 2026, with free cash flow yield of approximately 1.2% based on current market cap. The debt-to-equity ratio of 1.85 is elevated but manageable given consistent cash generation, and the current ratio of 1.13 suggests adequate liquidity. ROE of 17.8% reflects efficient use of equity, though the company relies on debt financing for store expansion and share repurchases, as evidenced by $130 million in dividends paid and no stock buybacks in the quarter.
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
Open an Account, get $2 TSLA now!
Valuation Analysis: Is DG Overvalued?
Given Dollar General's positive net income, the trailing P/E of 20.9x is the primary valuation metric, with a forward P/E of 15.7x indicating the market expects earnings growth. The gap between trailing and forward multiples implies an anticipated 33% EPS increase, aligning with the company's raised earnings outlook. The P/S ratio of 0.74x and EV/EBITDA of 14.2x provide additional context. Compared to the discount store industry average P/E of approximately 22x, Dollar General's trailing multiple of 20.9x is at a slight 5% discount, while the forward P/E of 15.7x represents a 29% discount, suggesting the market is pricing in below-average growth expectations relative to peers. This discount may be justified by the company's slower revenue growth and narrower margins versus best-in-class operators like Walmart, but it also presents potential upside if margin expansion accelerates. Historically, Dollar General's trailing P/E has ranged from 12x to 28x over the past five years; the current 20.9x sits near the midpoint, indicating neutral valuation relative to its own history. The PEG ratio of 0.61x suggests the stock is undervalued relative to its earnings growth rate, supporting a bullish case for value-oriented investors.
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 debt-to-equity ratio of 1.85 is elevated, indicating significant leverage that could strain cash flows if interest rates remain high. The company's net margin of 4.1% is below the industry average, leaving it vulnerable to cost inflation or pricing pressure. Revenue growth decelerated to 3.4% YoY in Q1 2026, and any further slowdown could pressure earnings and the stock's valuation. The company's reliance on consumables (82% of sales) exposes it to commodity price fluctuations and shifts in consumer spending patterns.
Market & Competitive Risks: The stock's beta of 0.247 indicates low market correlation, but its valuation is sensitive to consumer spending trends. The wide analyst target range ($90-$175) reflects high uncertainty about macro conditions. Competition from Walmart and other discount retailers could intensify, especially if the economy weakens further. Regulatory risks include potential minimum wage increases or trade tariffs that could raise costs. Recent news highlights that Dollar Tree's turnaround is gaining traction, which could increase competitive pressure.
Worst-Case Scenario: In a recession, low-income consumers could be disproportionately impacted, leading to further sales deceleration and margin compression. If revenue growth turns negative and margins revert to 2024 levels (net margin ~2%), earnings could fall sharply. The analyst low target of $90 implies a 28% downside from the current price of $125.75, aligning with the 52-week low of $95.11 (24% downside). An investor could lose up to 28% in this adverse scenario.
FAQ
The key risks are: 1) Financial risk: high debt-to-equity of 1.85 could strain cash flows if interest rates remain elevated. 2) Competitive risk: Walmart and Dollar Tree are intensifying competition in the discount space, potentially pressuring margins. 3) Macro risk: a recession could disproportionately impact low-income consumers, leading to sales deceleration and margin compression. 4) Company-specific risk: revenue growth decelerated to 3.4% YoY, and any further slowdown could trigger analyst downgrades and a stock decline. The most severe risk is a recession scenario where the stock could fall 28% to the analyst low target of $90.
The 12-month forecast is moderately bullish. The base case (50% probability) expects revenue growth of 3-4% and stable margins, driving the stock to the analyst average target of $130.90 (4% upside). The bull case (25% probability) sees revenue acceleration and margin expansion, pushing the stock to $145-$175 (15-39% upside). The bear case (25% probability) involves a recession or margin compression, sending the stock to $90-$110 (12-28% downside). The most likely scenario is the base case, with gradual improvement in margins and steady but unspectacular growth. Key assumptions include stable consumer spending and no major macro shocks.
Dollar General appears undervalued based on multiple metrics. The forward P/E of 15.7x is a 29% discount to the industry average of 22x, and the PEG ratio of 0.61x indicates the stock is cheap relative to its expected earnings growth. The trailing P/E of 20.9x is near the midpoint of its five-year range (12x-28x), suggesting neutral valuation versus history. The P/S ratio of 0.74x and EV/EBITDA of 14.2x also support an undervalued assessment. The market appears to be pricing in below-average growth expectations, which may be overly pessimistic given the company's margin recovery and defensive positioning. Overall, DG is undervalued relative to peers and its own growth prospects.
Dollar General offers a compelling risk/reward profile for value-oriented investors. The stock trades at a forward P/E of 15.7x, a 29% discount to the discount store industry average of 22x, and has a PEG ratio of 0.61x, suggesting undervaluation relative to its earnings growth. The consensus analyst rating is Buy with an average target of $130.90, implying 4.1% upside. However, the biggest downside risk is further revenue deceleration, which could pressure the stock toward the 52-week low of $95.11 (24% downside). For investors with a 12-month horizon and tolerance for moderate risk, DG is a good buy at current levels, particularly for those seeking defensive exposure with upside potential from margin recovery.
Dollar General is best suited for long-term investment, given its defensive business model, low beta of 0.247, and consistent dividend payments (yield 1.6%). The stock's volatility is relatively low, making it less attractive for short-term trading. The company's focus on value and private-label products provides resilience across economic cycles, supporting long-term compounding. A minimum holding period of 3-5 years is recommended to capture the benefits of margin recovery and store growth. Short-term traders may find limited upside given the modest 4.1% analyst target upside, but the stock could offer tactical opportunities during market pullbacks.
