NEW YORK (TheStreet) -- Shares of Dollar General Corp (DG) were slightly lower by 0.07% to $75.32 in early market trading Tuesday, after analysts at Raymond James upgraded the discount retailer by two notches to "strong buy" from "market perform" earlier this morning.
Analysts at the firm issued a $90 price target, citing the company's accelerating revenue growth.
Raymond James also cited Dollar General's accelerated share repurchase program, dividend growth and attractive valuation.
The firm believes Dollar General has had a great turnaround since the 2008 leveraged buy-out, but shares are underperforming relative to its peers.
Goodlettsville, Tenn.-based Dollar General is a discount retailer that sells a selection of merchandise, including consumable products such as food, paper and cleaning products, health and beauty products, pet supplies and tobacco products, as well as non-consumable products.
The company offers merchandise at low prices through 11,215 retail store locations across the country.
Separately, 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, solid stock price performance, growth in earnings per share, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DG's revenue growth has slightly outpaced the industry average of 1.8%. Since the same quarter one year prior, revenues slightly increased by 8.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 33.43% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- DOLLAR GENERAL CORP has improved earnings per share by 16.7% 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 ($3.95 versus $3.50).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Multiline Retail industry average. The net income increased by 13.9% when compared to the same quarter one year prior, going from $222.40 million to $253.24 million.
- The current debt-to-equity ratio, 0.50, 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 0.11 is very weak and demonstrates a lack of ability to pay short-term obligations.
- You can view the full analysis from the report here: DG Ratings Report