With a daily gain of 1.79% and a 3-month loss of 24.95%, Dollar General Corp (DG, Financial) presents an interesting case for value investors. The company's Earnings Per Share (EPS) stands at 10.61. But the question remains: Is the stock significantly undervalued? This article aims to provide a comprehensive valuation analysis of Dollar General. Read on to discover more.
Company Overview
Dollar General Corp (DG, Financial), a leading American discount retailer, operates over 19,000 stores across 47 states. The company specializes in selling branded and private-label products across a wide variety of categories. In fiscal 2022, 80% of net sales came from consumables, 11% from seasonal merchandise, 6% from home products, and 3% from apparel. With most of its items sold at everyday low prices of $5 or less, Dollar General has carved a niche for itself in the retail industry. Despite the current stock price of $163.38, the GF Value estimates the fair value at $277.89, suggesting that the stock may be significantly undervalued.
Understanding the GF Value
The GF Value is a proprietary measure that estimates the current intrinsic value of a stock. It considers historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line represents the fair value at which the stock should ideally be traded. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
Given Dollar General's current price of $163.38 per share and a market cap of $35.80 billion, the stock appears to be significantly undervalued according to the GF Value. This suggests that the long-term return of its stock is likely to be much higher than its business growth.
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