|
Related Topics
|
Category: Stock Market and Dollar General
Date: 13 March 2020 Stock Price: $141.97 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Dollar General Corporation a general retailer that operates over 16 200 stores across 44 states. Will the group benefit from consumers stock piling due to the Coronavirus fears?
|
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 4th quarter 2019 earnings report
The numbers below refers to the latest quarter unless specified otherwise:
- Total sales: $7.157 billion (up from $6.649 billion from the same quarter of the previous year)
- Sales increased by 7.6% over the last 12 months
- Cost of goods sold: $4.884 billion (up from $4.578 billion for the same quarter of the previous year)
- Cost of goods sold increased by 6.68% 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 : $535.437 million (up from $483.241 million for the same quarter of the previous year)
- Diluted income per share: $2.10 (up from $1.84 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 255.146 million (up from 262.536 million for the same quarter of the previous year)
- Cash and cash equivalents: $240.320 million
- Cash and cash equivalents per share: $0.94
- Cash and cash equivalents makes up 0.67% of Dollar General's market capital
- Cash and cash equivalents makes up 1.05% of Dollar General's total assets
- Inventories: $4.676 billion
- Inventories makes up 20.4% of Dollar General's total assets
- Stockholders equity in Dollar General: $6.702 billion
- Stockholders equity per share: $26.27
- Dollar General is trading at 5.4 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 4th quarter 2019 earnings report
GOODLETTSVILLE, Tenn.--(BUSINESS WIRE)--Dollar General Corporation (NYSE: DG) today reported financial results for its fiscal year 2019 fourth quarter (13 weeks) and fiscal year (52 weeks) ended January 31, 2020.
“We are very pleased with our fourth quarter results, capping off a strong year of performance across the Company,” said Todd Vasos, Dollar General’s chief executive officer. “Our full-year results were highlighted by double-digit diluted EPS growth, as well as our 30th consecutive year of same-store sales growth. During the fourth quarter, we delivered a healthy 3.2% increase in samestore sales, as well as strong margin performance. In addition, we executed well across many fronts, including our operating priorities and strategic initiatives.” “Our value-and-convenience proposition continues to resonate with both new and existing customers, and our unique real estate footprint remains a competitive advantage. As we enter 2020 from a position of strength, we will continue to keep our core customer at the center of all we do, while remaining steadfast in our efforts to deliver long-term shareholder value.”
“We are very pleased with our fourth quarter results, capping off a strong year of performance across the Company,” said Todd Vasos, Dollar General’s chief executive officer. “Our full-year results were highlighted by double-digit diluted EPS growth, as well as our 30th consecutive year of same-store sales growth. During the fourth quarter, we delivered a healthy 3.2% increase in samestore sales, as well as strong margin performance. In addition, we executed well across many fronts, including our operating priorities and strategic initiatives.” “Our value-and-convenience proposition continues to resonate with both new and existing customers, and our unique real estate footprint remains a competitive advantage. As we enter 2020 from a position of strength, we will continue to keep our core customer at the center of all we do, while remaining steadfast in our efforts to deliver long-term shareholder value.”
Share Repurchases
In fiscal year 2019, the Company repurchased $1.2 billion of its common stock, or 8.3 million shares, at an average price of $145.46 per share, under its share repurchase program. The total remaining authorization for future repurchases was $1.1 billion at the end of fiscal year 2019. 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 March 11, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.36 per share on the Company’s common stock, which is a 12.5% increase over the prior quarterly dividend. The dividend is payable on or before April 21, 2020 to shareholders of record on April 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.
Fiscal Year 2020
Financial Guidance and Store Growth Outlook
For the 52-week fiscal year ending January 29, 2021 (“fiscal year 2020”), the Company expects the following:
• Net sales growth of 7.5% to 8.0%
• Same-store sales growth of 2.5% to 3.0%
• Diluted EPS growth of approximately 11.5%
• Diluted EPS growth of approximately 10.0% compared to fiscal year 2019 adjusted diluted EPS, which excludes the impact of the Significant Legal Expenses
• Diluted EPS assumes an effective tax rate within the range of 22.0% to 22.5%
• Share repurchases of approximately $1.15 billion
• Capital expenditures in the range of $925 million to $975 million, including those related to investments in the Company’s strategic initiatives The diluted EPS growth guidance outlined above includes the anticipated impact of previously implemented tariff rates on certain products imported from China.
The guidance does not contemplate any additional increases in tariff rates, any expansion of additional products subject to tariffs, or any tariff-related impacts to broader consumer spending. Based on information currently known by management, the Company does not anticipate that supply chain disruptions experienced to date as a result of the coronavirus outbreak are likely to have a material impact on its fiscal 2020 financial results. However, the Company continues to monitor this evolving situation, and there is no guarantee that this outbreak will not have a more significant impact on its business.
In fiscal year 2019, the Company repurchased $1.2 billion of its common stock, or 8.3 million shares, at an average price of $145.46 per share, under its share repurchase program. The total remaining authorization for future repurchases was $1.1 billion at the end of fiscal year 2019. 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 March 11, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.36 per share on the Company’s common stock, which is a 12.5% increase over the prior quarterly dividend. The dividend is payable on or before April 21, 2020 to shareholders of record on April 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.
Fiscal Year 2020
Financial Guidance and Store Growth Outlook
For the 52-week fiscal year ending January 29, 2021 (“fiscal year 2020”), the Company expects the following:
• Net sales growth of 7.5% to 8.0%
• Same-store sales growth of 2.5% to 3.0%
• Diluted EPS growth of approximately 11.5%
• Diluted EPS growth of approximately 10.0% compared to fiscal year 2019 adjusted diluted EPS, which excludes the impact of the Significant Legal Expenses
• Diluted EPS assumes an effective tax rate within the range of 22.0% to 22.5%
• Share repurchases of approximately $1.15 billion
• Capital expenditures in the range of $925 million to $975 million, including those related to investments in the Company’s strategic initiatives The diluted EPS growth guidance outlined above includes the anticipated impact of previously implemented tariff rates on certain products imported from China.
The guidance does not contemplate any additional increases in tariff rates, any expansion of additional products subject to tariffs, or any tariff-related impacts to broader consumer spending. Based on information currently known by management, the Company does not anticipate that supply chain disruptions experienced to date as a result of the coronavirus outbreak are likely to have a material impact on its fiscal 2020 financial results. However, the Company continues to monitor this evolving situation, and there is no guarantee that this outbreak will not have a more significant impact on its business.
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 $74.30 and its currently trading at $141.97. That's a very strong return of 62.6% 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 $167.44 than it is to its 52 week low of $108.74 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 $167.44 than it is to its 52 week low of $108.74 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 coverage of Dollar General
The extract below discusses the latest earnings report from Dollar General as obtained from TheStreet.com
Dollar General (DG) beat Wall Street's fourth-quarter earnings and revenue expectations Thursday, boosted by increased sales in new stores and growth in same-store sales. Shares were falling 2.3% to $154 in premarket trading. The Goodlettsville, Tennessee-based discount retailer reported net income of $535.4 million, or $2.10 a share, up from $483.2 million, or $1.84 a share, a year ago. Analysts expected earnings of $2.01 a share.
Sales totaled $7.16 billion, up from $6.65 billion a year ago and ahead of analysts' estimates of $7.15 billion in sales. Same-store sales rose 3.2%, beating forecasts of 2.8%. "Our full-year results were highlighted by double-digit diluted EPS growth, as well as our 30 consecutive year of same-store sales growth," CEO Todd Vasos said in a statement. "During the fourth quarter, we delivered a healthy 3.2% increase in same-store sales, as well as strong margin performance."
Read the full article here
Dollar General (DG) beat Wall Street's fourth-quarter earnings and revenue expectations Thursday, boosted by increased sales in new stores and growth in same-store sales. Shares were falling 2.3% to $154 in premarket trading. The Goodlettsville, Tennessee-based discount retailer reported net income of $535.4 million, or $2.10 a share, up from $483.2 million, or $1.84 a share, a year ago. Analysts expected earnings of $2.01 a share.
Sales totaled $7.16 billion, up from $6.65 billion a year ago and ahead of analysts' estimates of $7.15 billion in sales. Same-store sales rose 3.2%, beating forecasts of 2.8%. "Our full-year results were highlighted by double-digit diluted EPS growth, as well as our 30 consecutive year of same-store sales growth," CEO Todd Vasos said in a statement. "During the fourth quarter, we delivered a healthy 3.2% increase in same-store sales, as well as strong margin performance."
Read the full article here
Dollar General (NYSE: DG) latest stock valuation
So based on the 4th quarter and full year 2019 earnings report and 2020 fiscal guidance provided by Dollar General what do we value Dollar General's stock at? Based on the earnings reported by Dollar General our valuation model provides a target (full value) price for Del Taco's at $134.50 a stock.
We therefore believe the stock is slightly 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 $134.50. Therefore we believe a good entry point into Dollar General's stock would be at $121 or below.
We therefore believe the stock is slightly 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 $134.50. Therefore we believe a good entry point into Dollar General's stock would be at $121 or below.
Next earnings release of Dollar General
It is expected that Dollar General will release their 1st quarter 2020 earnings towards the middle of June 2020