Dollar General Maintains Hold Rating at Deutsche Bank
Wednesday, September 21, 2021 2:55 PM



Analysts at Deutsche Bank reiterated Hold rating on the shares of Dollar General Corp. (NYSE: DG) as they believe that the company has demonstrated a remarkable turnaround since before going private. They set a price target of $38 for the stock.

 

DB analysts state the Hold recommendations suggest minimal upside from current levels. They state that the company sits on the defensive/low beta side of their Double Barbell Investment Strategy. They add that the company has structural advantages in today's competitive macro backdrop, and they expect the stock to be range bound after its recent 12 percent move since posting Q2 FY2011 results on August 30, 2011. They state that the store’s sales per square feet have improved over $50 to $191 in 2011 from $140 in 2004. They add that many of the key drivers on this front have materialized, including longer store hours, 100- 200 bps lift and raising shelf gondolas to 78 inches. They state that the company posted 9.9 percent margins in 2010 and is on pace to achieve 10 percent EBIT margins in 2011. They cautioned that if SSS slow, this would create some pressure on margins as Dollar General continues to accelerate door growth, and GPM could see some impact due to mix and higher shipping or transportation expenses. They state that the company’s interest expense has dropped from $391.9 million in 2008 to their forecasted number of $224.2 million in 2011.

 

On a year-to-date basis, Dollar General has a share performance of 24.13 percent, and as compared to Standard & Poor’s 500, it has an YTD share performance of 28.38 percent.

 

Dollar General operates as a discount retailer of general merchandise in the US. It has a market capitalization of $13 billion with a P/E ratio of 18.75. It has more than 341 million outstanding homes.

 

Shares of Dollar General were down 0.11 percent or 4 cents to trade at $37.61.

 


 

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