Overview of Dollar General (DG) earnings release for the 4th quarter of their 2021 fiscal year
Category: Dollar General (DG)
Date: 17 March 2022 Stock Price of Dollar General (DG): $221.94 Market Capital of Dollar General (DG): 51.8 billion We take a look at the 4th quarter earnings release of their 2021 fiscal year of Dollar General Corporation a general retailer that operates over 16 200 stores across 44 states. Their 4th quarter 2021 net sales topped $8.65 billion and net earnings came in at $597 million.
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I want to thank our associates for their tireless work over the past several months in helping our customers and communities impacted by the COVID-19 pandemic-Todd Vasos, Dollar General’s chief executive officer"
About Dollar General (DG)
Dollar General Corporation has been delivering value to shoppers for more than 80 years. Dollar General helps shoppers Save time. Save money. Every day!® by offering products that are frequently used and replenished, such as food, snacks, health and beauty aids, cleaning supplies, basic apparel, housewares and seasonal items at everyday low prices in convenient neighborhood locations. Dollar General operated 16,278 stores in 44 states as of January 31, 2020. In addition to high-quality private brands, Dollar General sells products from America's most-trusted manufacturers such as Clorox, Energizer, Procter & Gamble, Hanes, Coca-Cola, Mars, Unilever, Nestle, KimberlyClark, Kellogg's, General Mills, and PepsiCo.
Overview of Dollar General's 4th quarter 2021 earnings report
- Net Sales Increased 3.9% to $8.5 Billion
- Same-Store Sales Decreased 0.6%; Increased 11.6% on a two-year stack basis1
- Operating Profit of $665.6 Million, or 7.8% as a percentage of net sales
- Diluted Earnings Per Share (“EPS”) of $2.08, representing a two-year compound annual growth rate of 21.0%
- Year to Date Cash Flows From Operations of $2.2 Billion
- Board of Directors Increases Share Repurchase Program Authorization; Declares Quarterly Cash Dividend of $0.42 per share
Dollar General's management commentary on their 4th quarter 2021 earnings report
GOODLETTSVILLE, Tenn.--(BUSINESS WIRE)--Dollar General Corporation (NYSE: DG) today reported financial results for its fiscal year 2021 fourth quarter (13 weeks) and fiscal year (52 weeks) ended January 28, 2022.
“We are pleased with our fourth quarter and fiscal year results, and I want to thank our associates for their unwavering commitment to meeting the critical needs of our customers during the pandemic,” said Todd Vasos, Dollar General’s chief executive officer. “Despite a more challenging than expected operating environment, our teams remained focused on executing our operating priorities and advancing our strategic initiatives, which we believe position us well for solid sales and profit growth in 2022 and beyond.” “For the full year, we are pleased with our net sales increase of 1.4%, which was on the high end of our guidance, and on top of a robust 21.6% increase in fiscal 2020. In addition, during the year, we completed the initial rollout of DG Fresh, executed more than 2,900 real estate projects, including the opening of our 18,000 store and 50 standalone pOpshelf locations, and launched new initiatives focused on health and international expansion.” “Overall, we are excited about our plans for 2022, as we look to further differentiate Dollar General from the rest of the retail landscape, while delivering long-term sustainable growth and value for our shareholders.”
“We are pleased with our fourth quarter and fiscal year results, and I want to thank our associates for their unwavering commitment to meeting the critical needs of our customers during the pandemic,” said Todd Vasos, Dollar General’s chief executive officer. “Despite a more challenging than expected operating environment, our teams remained focused on executing our operating priorities and advancing our strategic initiatives, which we believe position us well for solid sales and profit growth in 2022 and beyond.” “For the full year, we are pleased with our net sales increase of 1.4%, which was on the high end of our guidance, and on top of a robust 21.6% increase in fiscal 2020. In addition, during the year, we completed the initial rollout of DG Fresh, executed more than 2,900 real estate projects, including the opening of our 18,000 store and 50 standalone pOpshelf locations, and launched new initiatives focused on health and international expansion.” “Overall, we are excited about our plans for 2022, as we look to further differentiate Dollar General from the rest of the retail landscape, while delivering long-term sustainable growth and value for our shareholders.”
Merchandise Inventories
As of January 28, 2022, total merchandise inventories, at cost, were $5.6 billion compared to $5.2 billion as of January 29, 2021, an increase of 1.4% on a per-store basis. Capital Expenditures Total additions to property and equipment in fiscal year 2021 were $1.1 billion, including approximately: $510 million for improvements, upgrades, remodels and relocations of existing stores; $268 million for distribution and transportation related projects; $244 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; and $44 million for information systems upgrades and technology-related projects. During fiscal year 2021, the Company opened 1,050 new stores, remodeled 1,752 stores, and relocated 100 stores. Share Repurchases In fiscal year 2021, the Company repurchased $2.5 billion of its common stock, or 12.1 million shares, at an average price of $211.45 per share, under its share repurchase program. The total remaining authorization for future repurchases was $2.1 billion at the end of fiscal year 2021. Under the authorization, repurchases may be made from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions. The timing, manner and number of shares repurchased will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under the Company’s debt agreements and other factors. The authorization has no expiration date.
Dividend
On March 16, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.55 per share on the Company’s common stock, payable on or before April 19, 2022 to shareholders of record on April 5, 2022. While the Board of Directors intends to continue regular cash dividends, the declaration and amount of future dividends are subject to the sole discretion of the Board and will depend upon, among other things, the Company’s results of operations, cash requirements, financial condition, contractual restrictions, and other factors the Board may deem relevant in its sole discretion.
Fiscal Year 2022 Financial Guidance and Store Growth Outlook
Uncertainty continues to exist regarding the current geopolitical conflict, as well as the recovery from the impact of the COVID-19 pandemic, including its impact on the U.S. economy, consumer behavior and the Company’s business. In addition, specific financial outcomes could be impacted by several variables, which include, but are not limited to, economic recovery, employment levels, continued or additional disruptions to the supply chain, and the ongoing impact of the COVID-19 pandemic
As of January 28, 2022, total merchandise inventories, at cost, were $5.6 billion compared to $5.2 billion as of January 29, 2021, an increase of 1.4% on a per-store basis. Capital Expenditures Total additions to property and equipment in fiscal year 2021 were $1.1 billion, including approximately: $510 million for improvements, upgrades, remodels and relocations of existing stores; $268 million for distribution and transportation related projects; $244 million related to store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; and $44 million for information systems upgrades and technology-related projects. During fiscal year 2021, the Company opened 1,050 new stores, remodeled 1,752 stores, and relocated 100 stores. Share Repurchases In fiscal year 2021, the Company repurchased $2.5 billion of its common stock, or 12.1 million shares, at an average price of $211.45 per share, under its share repurchase program. The total remaining authorization for future repurchases was $2.1 billion at the end of fiscal year 2021. Under the authorization, repurchases may be made from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions. The timing, manner and number of shares repurchased will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under the Company’s debt agreements and other factors. The authorization has no expiration date.
Dividend
On March 16, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.55 per share on the Company’s common stock, payable on or before April 19, 2022 to shareholders of record on April 5, 2022. While the Board of Directors intends to continue regular cash dividends, the declaration and amount of future dividends are subject to the sole discretion of the Board and will depend upon, among other things, the Company’s results of operations, cash requirements, financial condition, contractual restrictions, and other factors the Board may deem relevant in its sole discretion.
Fiscal Year 2022 Financial Guidance and Store Growth Outlook
Uncertainty continues to exist regarding the current geopolitical conflict, as well as the recovery from the impact of the COVID-19 pandemic, including its impact on the U.S. economy, consumer behavior and the Company’s business. In addition, specific financial outcomes could be impacted by several variables, which include, but are not limited to, economic recovery, employment levels, continued or additional disruptions to the supply chain, and the ongoing impact of the COVID-19 pandemic
Dollar General (NYSE:DG) stock price history over the last 5 years
The image below shows the stock price history of Dollar General over the last 5 years, and its been a very good time for Dollar General stockholders. Over the last 5 years the stock has provided a very strong return of 221.8% provided to Dollar General stockholders
The stock of Dollar General is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Dollar General is very positive at this point in time.
The stock of Dollar General is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Dollar General is very positive at this point in time.
Dollar General (DG) stock vs Dollar Tree (DLTR) stock over the last 5 years
The image below shows the stock price return of Dollar General (DG) and Dollar Tree (DLTR) over the last 5 years. While both these stocks are active in the retail space in the USA, their stock price trends and returns are very different. The summary below shows the stock price returns of these two stocks over the last 5 years.
The stock of Dollar General has therefore easily outperformed that of Dollar Tree over the last 5 years.
- Dollar General (DG): 221.8%
- Dollar Tree (DLTR): 62.8%
The stock of Dollar General has therefore easily outperformed that of Dollar Tree over the last 5 years.
Dollar General (NYSE: DG) latest stock valuation
So based on the 3rd quarter 2020 earnings report what do we value Dollar General stock at? Based on the earnings reported by Dollar General our valuation model provides a target price (full value price) for Dollar General at $181.70 a stock.
We therefore believe the stock is overvalued at its current price. We usually recommend that long term fundamental or value investors look to enter the stock at least 10% below our target price (full value price) of $181.70. Therefore we believe a good entry point into Dollar General stock would be at $163.50 or below.
We expect the stock of Dollar General to pull back slightly in coming weeks and months to levels closer to our target price. Since the stock of Dollar General (DG) is trading at well above our target price we rate the stock of Dollar General as a sell.
We therefore believe the stock is overvalued at its current price. We usually recommend that long term fundamental or value investors look to enter the stock at least 10% below our target price (full value price) of $181.70. Therefore we believe a good entry point into Dollar General stock would be at $163.50 or below.
We expect the stock of Dollar General to pull back slightly in coming weeks and months to levels closer to our target price. Since the stock of Dollar General (DG) is trading at well above our target price we rate the stock of Dollar General as a sell.
Next earnings release of Dollar General
It is expected that Dollar General will release their 1st quarter 2022 earnings towards the end of June 2022