By Rob Otman
Dollar General (NYSE: DG) is a large cap company that operates within the multiline retail industry. Its market cap is $20 billion today, and the total one-year return is -17.05% for shareholders.
Dollar General stock is underperforming the market. It’s beaten down, but it reports earnings next week. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Dollar General reported a recent EPS growth rate of 15.38%. That’s below the multiline retail industry average of 37.59%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the multiline retail industry is 28.74. And Dollar General’s ratio comes in at 16.06. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Dollar General stock is 59.4. That’s below the multiline retail industry average of 120.28. The company is less leveraged.
✗ Free Cash Flow per Share Growth: Dollar General’s FCF has been lower than that of its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Dollar General comes in at 6.89% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Dollar General’s profit margin is above the multiline retail average of 6.61%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Dollar General is 23.2%, and that’s above its industry average ROE of 21.15%.
Dollar General stock passes four of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Buy With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here. …read more
Source:: Investment You
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