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Category: Stock Market and Dollar General (DG)
Date: 29 May 2020 Stock Price of Dollar General: $184.11 We take a look at the 1st quarter earnings release of their 2019 fiscal year of Dollar General Corporation a general retailer that operates over 16 200 stores across 44 states. Their 1st quarter 2020 net sales topped $8.45 billion.
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These are certainly unprecedented times, and our hearts go out to everyone who has been affected by the COVID-19 pandemic- said Todd Vasos, Dollar General’s chief executive officer"
About Dollar General
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 1st quarter 2019 earnings report
The numbers below refers to the latest quarter unless specified otherwise:
- Total sales: $8.448 billion (up from $6.623 billion from the same quarter of the previous year)
- Sales increased by 27.6% over the last 12 months
- Cost of goods sold: $5.852 billion (up from $4.620 billion for the same quarter of the previous year)
- Cost of goods sold increased by 26.7% over the last 12 months
- Some margin gain for Dollar General as their sales increased at a faster rate than their cost of goods sold
- Net income : $650.446 million (up from $385.013 million for the same quarter of the previous year)
- Diluted income per share: $2.56 (up from $1.48 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 253.627 million (up from 260.265 million for the same quarter of the previous year)
- Cash and cash equivalents: $2.673 billion
- Cash and cash equivalents per share: $10.53
- Cash and cash equivalents makes up 5.7% of Dollar General's market capital
- Cash and cash equivalents makes up 10.7% of Dollar General's total assets
- Inventories: $4.107 billion
- Inventories makes up 16.5% of Dollar General's total assets
- Stockholders equity in Dollar General: $7.209 billion
- Stockholders equity per share: $28.42
- Dollar General is trading at 6.5 times its stockholders equity which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
- The S&P 500 price to book value is at 3.34 (Click here to find out more details about the S&P 500)
Dollar General's management commentary on their 1st quarter 2020 earnings report
GOODLETTSVILLE, Tenn.--(BUSINESS WIRE)-- Dollar General Corporation (NYSE: DG) today reported financial results for its fiscal year 2020 first quarter (13 weeks) ended May 1, 2020. Net Sales Increased 27.6%; Same-Store Sales Increased 21.7% Operating Profit Increased 69.2% to $866.8 million Diluted Earnings Per Share (“EPS”) Increased 73.0% to $2.56 Cash Flows From Operations Increased 202.4% ...
“These are certainly unprecedented times, and our hearts go out to everyone who has been affected by the COVID-19 pandemic,” said Todd Vasos, Dollar General’s chief executive officer. “We are very grateful for those serving on the front lines, and particularly our store associates, distribution center employees and private fleet drivers for their incredible efforts. In the midst of a very challenging operating environment, our team members have been tirelessly committed to fulfilling the Company’s mission of Serving Others, and we could not be more proud of how they have responded to the needs of our communities. As a result of their efforts, we are very pleased to report strong first-quarter financial results.”
“Looking ahead, we remain committed to our operating priorities and strategic initiatives to drive continued growth and meaningful long-term value for shareholders. As one of America’s essential retailers, we believe our unique brick-and-mortar footprint positions us well to continue delivering value and convenience for our customers, particularly at a time when they need us most.”
“These are certainly unprecedented times, and our hearts go out to everyone who has been affected by the COVID-19 pandemic,” said Todd Vasos, Dollar General’s chief executive officer. “We are very grateful for those serving on the front lines, and particularly our store associates, distribution center employees and private fleet drivers for their incredible efforts. In the midst of a very challenging operating environment, our team members have been tirelessly committed to fulfilling the Company’s mission of Serving Others, and we could not be more proud of how they have responded to the needs of our communities. As a result of their efforts, we are very pleased to report strong first-quarter financial results.”
“Looking ahead, we remain committed to our operating priorities and strategic initiatives to drive continued growth and meaningful long-term value for shareholders. As one of America’s essential retailers, we believe our unique brick-and-mortar footprint positions us well to continue delivering value and convenience for our customers, particularly at a time when they need us most.”
Share Repurchases
The Company temporarily suspended repurchases of its common stock under its share repurchase program during the first quarter of 2020 to evaluate the implications of the COVID-19 pandemic. The Company repurchased $63 million of its common stock, or 0.5 million shares, under the share repurchase program at an average price of $139.83 per share in the first quarter of 2020 prior to the decision to suspend the program. The total remaining authorization for future repurchases was $1.1 billion at the end of the first quarter of 2020. Under the authorization, purchases may be made in the open market or in privately negotiated transactions from time to time subject to market and other conditions. The authorization has no expiration date.
Dividend
On May 27, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.36 per share on the Company’s common stock, payable on or before July 21, 2020 to shareholders of record on July 7, 2020. 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.
Liquidity
To further strengthen the Company’s liquidity position during the quarter, the Company issued $1.0 billion of 3.5% Senior Notes due in 2030 and $500.0 million of 4.125% Senior Notes due in 2050. As of May 1, 2020, the Company had $2.7 billion in cash and cash equivalents as well as $1.1 billion of availability under its revolving credit facility.
Fiscal Year 2020 Update
As noted above, the Company realized a significant sales benefit in the first quarter of the fiscal year as a result of COVID-19. In addition, since the end of the first quarter, the Company has continued to experience elevated demand in its stores, albeit with slightly more variability and some moderation in recent days. As a result, through May 26, 2020, same-store sales have increased approximately 22% as compared to the comparable period in the 2019 fiscal year.
Due to the significant uncertainty that continues to exist around the severity and duration of the COVID-19 pandemic, including its impact on the U.S. economy, consumer behavior and the Company’s business, there is a lack of visibility for the remainder of 2020 with many unknowns. As a result, it is difficult to predict specific outcomes. While the Company expects it will exceed the fiscal 2020 net sales, same-store sales and diluted EPS guidance that was issued on March 12, 2020, the Company is not able to forecast the extent of such upside for the reasons mentioned above and accordingly is withdrawing the guidance issued on March 12, 2020.
However, for fiscal year 2020, the Company continues to plan for:
The Company temporarily suspended repurchases of its common stock under its share repurchase program during the first quarter of 2020 to evaluate the implications of the COVID-19 pandemic. The Company repurchased $63 million of its common stock, or 0.5 million shares, under the share repurchase program at an average price of $139.83 per share in the first quarter of 2020 prior to the decision to suspend the program. The total remaining authorization for future repurchases was $1.1 billion at the end of the first quarter of 2020. Under the authorization, purchases may be made in the open market or in privately negotiated transactions from time to time subject to market and other conditions. The authorization has no expiration date.
Dividend
On May 27, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.36 per share on the Company’s common stock, payable on or before July 21, 2020 to shareholders of record on July 7, 2020. 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.
Liquidity
To further strengthen the Company’s liquidity position during the quarter, the Company issued $1.0 billion of 3.5% Senior Notes due in 2030 and $500.0 million of 4.125% Senior Notes due in 2050. As of May 1, 2020, the Company had $2.7 billion in cash and cash equivalents as well as $1.1 billion of availability under its revolving credit facility.
Fiscal Year 2020 Update
As noted above, the Company realized a significant sales benefit in the first quarter of the fiscal year as a result of COVID-19. In addition, since the end of the first quarter, the Company has continued to experience elevated demand in its stores, albeit with slightly more variability and some moderation in recent days. As a result, through May 26, 2020, same-store sales have increased approximately 22% as compared to the comparable period in the 2019 fiscal year.
Due to the significant uncertainty that continues to exist around the severity and duration of the COVID-19 pandemic, including its impact on the U.S. economy, consumer behavior and the Company’s business, there is a lack of visibility for the remainder of 2020 with many unknowns. As a result, it is difficult to predict specific outcomes. While the Company expects it will exceed the fiscal 2020 net sales, same-store sales and diluted EPS guidance that was issued on March 12, 2020, the Company is not able to forecast the extent of such upside for the reasons mentioned above and accordingly is withdrawing the guidance issued on March 12, 2020.
However, for fiscal year 2020, the Company continues to plan for:
- Capital expenditures in the range of $925 million to $975 million, including those related to investments in the Company’s strategic initiatives
- Approximately 2,600 real estate projects, including 1,000 new store openings, 1,500 mature store remodels, and 80 store relocations.
Dollar General (NYSE:DG) stock price history
The image below, obtained from Google, shows the stock price history of Dollar General over the last 5 years, and its been a very good time for Dollar General stockholders. 5 years ago the stock of Dollar General was trading at $72.60 and its currently trading at $184.11. That's a very strong return of 153.6% provided to Dollar General stockholders over the last 5 years.
The stock of Dollar General is trading at a lot closer to its 52 week high of $189.50 than it is to its 52 week low of $118.24 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 of $189.50 than it is to its 52 week low of $118.24 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.
Recent Google search trends for Dollar General stock price and DG stock price
The graphic below shows recent search trends for Dollar general stock price and DG stock price over the last 12 months in the United States as obtained from Google Trends. Dollar General stock price search query saw a significant spike in mid March 2020, an this coincided with a sharp decline in their stock price due to significant market sell offs triggered by the coronavirus pandemic and the impact its having on economic growth and employment.
Recent coverage of Dollar General
The extract below discusses the latest earnings report from Dollar General as obtained from CNBC.com
Dollar General (DG) – The discount retailer reported quarterly profit of $2.56 per share, compared to a consensus estimate of $1.74 a share. Revenue exceeded forecasts as well, and a same-store sales jump of 21.7% was well above the 8.7% FactSet estimate. Dollar General said the pandemic had a significant positive impact on sales, and that it expects to exceed prior forecasts.
Read the full article here
Dollar General (DG) – The discount retailer reported quarterly profit of $2.56 per share, compared to a consensus estimate of $1.74 a share. Revenue exceeded forecasts as well, and a same-store sales jump of 21.7% was well above the 8.7% FactSet estimate. Dollar General said the pandemic had a significant positive impact on sales, and that it expects to exceed prior forecasts.
Read the full article here
Dollar General (NYSE: DG) latest stock valuation
So based on the 1st quarter and full year 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 (full value) price for Dollar General at $171.40 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 $171.40. Therefore we believe a good entry point into Del Taco's stock would be at $154.30 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.
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 $171.40. Therefore we believe a good entry point into Del Taco's stock would be at $154.30 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.
Next earnings release of Dollar General
It is expected that Dollar General will release their 2nd quarter 2020 earnings towards the end of August 2020