Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
(NYSE:) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+ . The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 2.2%. Since the same quarter one year prior, revenues rose by 13.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- DOLLAR GENERAL CORP has improved earnings per share by 40.0% 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 $2.22 versus $1.81 in the prior year. This year, the market expects an improvement in earnings ($2.81 versus $2.22).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multiline Retail industry. The net income increased by 36.0% when compared to the same quarter one year prior, rising from $156.97 million to $213.42 million.
- Powered by its strong earnings growth of 40.00% and other important driving factors, this stock has surged by 51.58% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.10 is very weak and demonstrates a lack of ability to pay short-term obligations.
Dollar General Corporation operates as a discount retailer primarily in the southern, southwestern, midwestern, and eastern United States. The company has a P/E ratio of 21.2, below the average retail industry P/E ratio of 21.7 and above the S&P 500 P/E ratio of 17.7. Dollar General has a market cap of $17.31 billion and is part of the sector and industry. Shares are up 24.8% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.