Dollar General Reports 2nd Quarter
- By Alberto Abaterusso
Dollar General Corp. (DG) reported its results for the second quarter of fiscal 2017 on Aug. 31.
The discount retailer posted adjusted EPS of $1.10, beating expectations by one cent and increasing 1.9% from the comparable quarter of 2016. The beat produced a positive surprise of 0.9%.
Warning! GuruFocus has detected 3 Warning Sign with DG. Click here to check it out.
The intrinsic value of DG
Source: Yahoo Finance
Quarterly revenue of $5.83 billion beat estimates of $5.53 billion and grew 8.1% from the comparable quarter of 2016.
Dollar General's second-quarter net income declined 3.91% from $307 million in the year-ago quarter.
Same-store sales grew 2.6%, driven mainly by increases in the average transaction amount and customer traffic. The company witnessed positive results in the consumables and seasonal categories, which were offset by negative performances in home products and apparel.
Dollar General generated approximately $786 million in operating cash flow, a 0.9% decrease on a year-over-year basis. The company allocated $314 million to capital expenditures. Free cash flow was approximately $472 million, of which the company returned $145.7 million to shareholders through $70.71 million in dividends and $74.99 million in share buybacks.
For the full year, the company forecasts diluted EPS between $4.35 and $4.50. Net sales are expected to grow between 5% and 7%, but same-store sales are projected to increase by 2%.
The company expects to spend $715 million to $765 milllion in capital expenditures.
Dollar General's board of directors declared a quarterly divend of 26 cents per share. The shareholders of record as of Oct. 10 will receive the dividend payment on Oct. 24.
The company closed the quarter with approximately $214.73 million in cash on hand and securities. Dollar General has a quick ratio of 0.17 and a current ratio of 1.39 versus industry averages of 0.76 and 1.22.
The stock is currently trading around $72.06 per share with a price-earnings (P/E) ratio of 16.31, a price-book (P/B) ratio of 3.59 and a price-sales (P/S) ratio of 0.91. The forward P/E ratio is 16.18.
For full fiscal 2017, analysts forecast Dollar General will generate EPS of $4.51. When the EPS is multiplied by the forward P/E ratio, it yields $72.97 per share, slightly higher than the current market value. The stock is trading below its 52-week high of $80.67 per share. The 52-week low is $65.97 per share.
The analysts' average target price for Dollar General is $81.74 per share, which represents an upside of 13.4% from the current market value.
The recommendation rating is 2.4 out of a total of 5.
For fiscal 2018, analysts forecast Dollar General's earnings will grow 11.1%. Over the next five years, they expect 7.72% growth per annum.
Disclosure: I have no positions in Dollar General.
This article first appeared on GuruFocus.
Warning! GuruFocus has detected 3 Warning Sign with DG. Click here to check it out.
The intrinsic value of DG
