Why Dollar General (DG) Stock Is Up Today

Dollar General (DG) stock is higher on Friday after BB&T lifted its ratings on the discount retailer to 'buy' from 'hold' with a $78 price target.
By U-Jin Lee ,

NEW YORK (TheStreet) -- Dollar General Corp. (DG) - Get Report  stock is higher by 2.38% to $64.19 on Friday after BB&T lifted its ratings on the discount retailer to "buy" from "hold" with a $78 price target. 

Dollar General earlier this week announced initiatives for the holiday season. It will be providing consumers with deals online and at more than 12,000 locations as competition among retailers heightens ahead of the holiday season.

"Dollar General's holiday selection will offer customers the top items on their holiday lists including brand name toys, popular gift cards, numerous gift options including electronics and apparel, affordable décor and delicious food options," Dollar General Executive VP Jim Thorpe stated.

Based in Goodlettsville, TN, Dollar General provides various merchandise products in the southern, southwestern, midwestern, and eastern U.S.

Separately, TheStreet Ratings team rates DOLLAR GENERAL CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate DOLLAR GENERAL CORP (DG) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in net income. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.6%. Since the same quarter one year prior, revenues slightly increased by 7.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DOLLAR GENERAL CORP has improved earnings per share by 14.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DOLLAR GENERAL CORP increased its bottom line by earning $3.50 versus $3.17 in the prior year. This year, the market expects an improvement in earnings ($3.93 versus $3.50).
  • The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.09 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Multiline Retail industry and the overall market on the basis of return on equity, DOLLAR GENERAL CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Multiline Retail industry average, but is greater than that of the S&P 500. The net income increased by 12.4% when compared to the same quarter one year prior, going from $251.26 million to $282.35 million.
  • You can view the full analysis from the report here: DG
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