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Category: Stock Market and Dollar General (DG)
Date: 15 September 2020 Stock Price of Dollar General: $202.11 We take a look at the 2nd quarter earnings release of their 2020 fiscal year of Dollar General Corporation a general retailer that operates over 16 200 stores across 44 states. Their 2nd quarter 2020 net sales topped $8.68 billion and they reported net earnings for the 2nd quarter 2020 of $787.6 million.
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We continue to operate from a position of strength and are excited to announce the acceleration of several key strategic initiatives, including the rollout of DG Pickup, DG Fresh, and our Non-Consumables initiative, as well as an increase in our expected number of real estate projects for fiscal 2020- 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 2nd quarter 2020 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 2nd quarter 2020 earnings report
GOODLETTSVILLE, Tenn.--(BUSINESS WIRE)-- Dollar General Corporation (NYSE: DG) today reported financial results for its fiscal year 2020 second quarter (13 weeks) ended July 31, 2020.
“I want to thank our associates for their exceptional work over the past several months as we continue to navigate this challenging and dynamic operating environment,” said Todd Vasos, Dollar General’s chief executive officer. “As the neighborhood general store for thousands of communities across the country, we appreciate the importance of our role in providing customers with affordable, convenient, and close-to-home access to everyday essentials. As a result of the team’s strong execution and tireless commitment to serving our customers, we are pleased to report strong second-quarter financial results.
“We continue to operate from a position of strength and are excited to announce the acceleration of several key strategic initiatives, including the rollout of DG Pickup, DG Fresh, and our Non-Consumables initiative, as well as an increase in our expected number of real estate projects for fiscal 2020. Our robust portfolio of initiatives, coupled with our expansive real estate footprint of nearly 17,000 store locations, positions us well to continue delivering value and convenience for our customers, while driving sustainable long-term growth and value for our shareholders.”
- Net Sales Increased 24.4%; Same-Store Sales Increased 18.8%
- Operating Profit Increased 80.5% to $1.0 billion
- Diluted Earnings Per Share (“EPS”) Increased 89.1% to $3.12
- Cash Flows From Operations Increased 157.2% to $2.9 billion
- $691 Million Returned to Shareholders through Share Repurchases and Cash Dividend
- Board of Directors Declares Third Quarter 2020 Cash Dividend of $0.36 per share; Increases Share Repurchase Program Authorization by $2.0 Billion
“I want to thank our associates for their exceptional work over the past several months as we continue to navigate this challenging and dynamic operating environment,” said Todd Vasos, Dollar General’s chief executive officer. “As the neighborhood general store for thousands of communities across the country, we appreciate the importance of our role in providing customers with affordable, convenient, and close-to-home access to everyday essentials. As a result of the team’s strong execution and tireless commitment to serving our customers, we are pleased to report strong second-quarter financial results.
“We continue to operate from a position of strength and are excited to announce the acceleration of several key strategic initiatives, including the rollout of DG Pickup, DG Fresh, and our Non-Consumables initiative, as well as an increase in our expected number of real estate projects for fiscal 2020. Our robust portfolio of initiatives, coupled with our expansive real estate footprint of nearly 17,000 store locations, positions us well to continue delivering value and convenience for our customers, while driving sustainable long-term growth and value for our shareholders.”
Merchandise Inventories
As of July 31, 2020, total merchandise inventories, at cost, were $4.4 billion compared to $4.4 billion as of August 2, 2019, a decrease of 5.9% on a per-store basis.
Capital Expenditures
Total additions to property and equipment in the 2020 26-week period were $424 million, including approximately: $162 million for improvements, upgrades, remodels and relocations of existing stores; $138 million for store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; $95 million for distribution and transportation related projects; and $26 million for information systems upgrades and technology-related projects. During the 2020 26-week period, the Company opened 500 new stores, remodeled 973 stores and relocated 43 stores.
Share Repurchases
The Company resumed repurchases of its common stock under its share repurchase program during the second quarter of 2020, after temporarily suspending repurchases during the first quarter of 2020 to evaluate the implications of the COVID-19 pandemic. The Company repurchased $602 million of its common stock, or 3.2 million shares, under the share repurchase program at an average price of $188.94 per share in the second quarter of 2020. The total remaining authorization for future repurchases was $481 million at the end of the second quarter of 2020. On August 26, 2020, the Company’s Board of Directors increased the authorization under the share repurchase program by $2.0 billion. 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 August 25, 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 October 20, 2020 to shareholders of record on October 6, 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.
Fiscal Year 2020 Update
As noted above, the Company realized a significant sales benefit in the 26-week period ended July 31, 2020, as a result of COVID-19. In addition, since the end of the second quarter, the Company has continued to experience elevated demand in its stores. As a result, from August 1, 2020 through August 25, 2020, same-store sales increased approximately 15% as compared to the comparable timeframe 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. Because it is difficult to predict specific outcomes, the Company is not issuing updated fiscal 2020 sales or EPS guidance at this time.
However, for the 52-week fiscal year ending January 29, 2021 (“fiscal year 2020”), the Company now expects the following:
As of July 31, 2020, total merchandise inventories, at cost, were $4.4 billion compared to $4.4 billion as of August 2, 2019, a decrease of 5.9% on a per-store basis.
Capital Expenditures
Total additions to property and equipment in the 2020 26-week period were $424 million, including approximately: $162 million for improvements, upgrades, remodels and relocations of existing stores; $138 million for store facilities, primarily for leasehold improvements, fixtures and equipment in new stores; $95 million for distribution and transportation related projects; and $26 million for information systems upgrades and technology-related projects. During the 2020 26-week period, the Company opened 500 new stores, remodeled 973 stores and relocated 43 stores.
Share Repurchases
The Company resumed repurchases of its common stock under its share repurchase program during the second quarter of 2020, after temporarily suspending repurchases during the first quarter of 2020 to evaluate the implications of the COVID-19 pandemic. The Company repurchased $602 million of its common stock, or 3.2 million shares, under the share repurchase program at an average price of $188.94 per share in the second quarter of 2020. The total remaining authorization for future repurchases was $481 million at the end of the second quarter of 2020. On August 26, 2020, the Company’s Board of Directors increased the authorization under the share repurchase program by $2.0 billion. 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 August 25, 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 October 20, 2020 to shareholders of record on October 6, 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.
Fiscal Year 2020 Update
As noted above, the Company realized a significant sales benefit in the 26-week period ended July 31, 2020, as a result of COVID-19. In addition, since the end of the second quarter, the Company has continued to experience elevated demand in its stores. As a result, from August 1, 2020 through August 25, 2020, same-store sales increased approximately 15% as compared to the comparable timeframe 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. Because it is difficult to predict specific outcomes, the Company is not issuing updated fiscal 2020 sales or EPS guidance at this time.
However, for the 52-week fiscal year ending January 29, 2021 (“fiscal year 2020”), the Company now expects the following:
- Share repurchases of approximately $2.5 billion;
- Capital expenditures, including those related to investments in the Company’s strategic initiatives, in the range of $1.0 billion to $1.1 billion, compared to the range of $925 million to $975 million reiterated on May 28, 2020; and
- 2,780 real estate projects, including 1,000 new store openings, 1,670 mature store remodels, and 110 store relocations, compared to its previous expectation of 2,580 real estate projects, including 1,000 new store openings, 1,500 mature store remodels, and 80 store relocations, reiterated on May 28, 2020.
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 around $70 and its currently trading at $202.1 That's a very strong return of 195% 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 $206.98 than it is to its 52 week low of $125 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 $206.98 than it is to its 52 week low of $125 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.
- Dollar General (DG): 195%
- Dollar Tree (DLTR): 41.03%
Recent coverage of Dollar General
The extract below discusses the latest earnings report from Dollar General as obtained from Gurufocus.com
EVP, Store Operations of Dollar General Corp (30-Year Financial, Insider Trades) Steven G Sunderland (insider trades) sold 10,236 shares of DG on 09/10/2020 at an average price of $200.03 a share. The total sale was $2 million.
Dollar General Corp is a discount retailer in the United States. It offers a selection of merchandise, including consumables, seasonal, home products and apparel. Dollar General Corp has a market cap of $49.71 billion; its shares were traded at around $199.61 with a P/E ratio of 21.69 and P/S ratio of 1.62. The dividend yield of Dollar General Corp stocks is 0.69%. Dollar General Corp had annual average EBITDA growth of 11.00% over the past ten years. GuruFocus rated Dollar General Corp the business predictability rank of 4-star. GuruFocus has detected 2 severe warning signs with Dollar General Corp.
Read the full article here
EVP, Store Operations of Dollar General Corp (30-Year Financial, Insider Trades) Steven G Sunderland (insider trades) sold 10,236 shares of DG on 09/10/2020 at an average price of $200.03 a share. The total sale was $2 million.
Dollar General Corp is a discount retailer in the United States. It offers a selection of merchandise, including consumables, seasonal, home products and apparel. Dollar General Corp has a market cap of $49.71 billion; its shares were traded at around $199.61 with a P/E ratio of 21.69 and P/S ratio of 1.62. The dividend yield of Dollar General Corp stocks is 0.69%. Dollar General Corp had annual average EBITDA growth of 11.00% over the past ten years. GuruFocus rated Dollar General Corp the business predictability rank of 4-star. GuruFocus has detected 2 severe warning signs with Dollar General Corp.
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 3rd quarter 2020 earnings towards the end of November 2020