Dollar General Corporation Stock Buy Recommendation Reiterated (DG)

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 ( TheStreet) -- Dollar General Corporation (NYSE: DG) has been reiterated by TheStreet Ratings as a buy with a ratings score of A- . 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, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

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Highlights from the ratings report include:
  • DG's revenue growth has slightly outpaced the industry average of 4.5%. Since the same quarter one year prior, revenues rose by 10.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DOLLAR GENERAL CORP has improved earnings per share by 24.0% 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 ($2.85 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 21.3% when compared to the same quarter one year prior, going from $171.16 million to $207.69 million.
  • 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, DOLLAR GENERAL CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 54.02% to $317.39 million when compared to the same quarter last year. In addition, DOLLAR GENERAL CORP has also vastly surpassed the industry average cash flow growth rate of -22.09%.

Dollar General Corporation operates as a discount retailer primarily in the southern, southwestern, midwestern, and eastern United States. Dollar General has a market cap of $15.12 billion and is part of the services sector and retail industry. The company has a P/E ratio of 16.8, below the S&P 500 P/E ratio of 17.7. Shares are up 4.3% year to date as of the close of trading on Monday.

You can view the full Dollar General Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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