NEW YORK (TheStreet) -- Dollar General  (DG) dipped 2.34% to $57.90 at 11:15 a.m. on Thursday after the retailer reported fourth-quarter sales that came up short of analysts' expectations.

Sales for the quarter ended Jan. 31 increased 6.8% year over year to $4.49 billion, which came up short of analysts' estimate of $4.62 billion, according to Thomson Reuters I/B/E/S. The company cited cold weather, stiff competition and low consumer confidence as the reasons for the performance.

Sales at stores open at least one year rose 1.3%. This is a crucial measure of a retailer's health because it excludes stores that opened or closed in the last year. The company anticipates same-store sales to rise 3% to 4% in the fiscal year 2014. Dollar General also expects earnings per share of $3.45 and $3.55 this fiscal year, which is short of analysts' estimate of $3.69, according to FactSet.

Revenue increased year over year to $322.17 million, or $1.01 per share, from $317.4 million, or 97 cents a share. 

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TheStreet Ratings team rates DOLLAR GENERAL CORP as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DOLLAR GENERAL CORP (DG) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

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

  • The revenue growth came in higher than the industry average of 10.1%. Since the same quarter one year prior, revenues rose by 10.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DOLLAR GENERAL CORP has improved earnings per share by 19.4% 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 $2.86 versus $2.22 in the prior year. This year, the market expects an improvement in earnings ($3.21 versus $2.86).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Multiline Retail industry average, but is less than that of the S&P 500. The net income increased by 14.3% when compared to the same quarter one year prior, going from $207.69 million to $237.39 million.
  • The current debt-to-equity ratio, 0.55, 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 0.10 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: DG Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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