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Here's How Dollar General Is Doing So Far This Year

Dec. 17, 2014 12:14 AM ETDollar General Corporation (DG)
William Bias profile picture
William Bias


  • New stores and increased customer traffic resulted in solid fundamental expansion.
  • Dollar General possesses a reasonable amount of long-term debt.
  • Dollar General has expanded its fundamentals at a solid pace over the past five years rewarding its shareholders in the process.

On Dec. 4, discount dollar chain Dollar General (NYSE: NYSE:DG) came out with its Q3 2014 earnings announcement and 10-q. The company clocked in excellent performance in 2014. Let's take a look to see what's happening with the company.

Solid fundamental expansion

Dollar General saw its year-to-date revenue, net income and free cash flow increase 7%, 1%, and 74%, respectively. Year-to-date same store sales increased 2.1% year-over-year. Moreover, customer traffic increases and expansion in the amount spent contributed to top line expansion. The company opened 617 new stores so far this year adding to the revenue expansion. This goes to show that the company knows how to bring in customers. More traffic equates to more opportunities to make a sale.

Dollar General's year-to-date net income increased 1%. Markdowns, inventory clearance, and higher sales of lower margin items such as tobacco and perishable products helped lower gross profit serving as a drag on year-to-date net income growth. Expenses pertaining to the attempted Family Dollar acquisition and increases in rent, utilities and incentive compensation also served as a drag on net income growth.

Dollar General's year-to-date free cash flow increased 74%. This was helped by the 11% increase in operating cash flow which was made possible by favorable changes in its assets and liabilities, especially accounts payable. Capital expenditures also declined 35% while disposal of plant, property and equipment increased 67%.

Balance sheet

Dollar General possesses an ok balance sheet. Its $216 million in cash equated to 4% of stockholder's equity. I like to see companies with cash amounting to 20% or more of stockholder's equity to get them through tough times and self-finance acquisitions. Dollar General's $2.7 billion in long-term debt equates to 50% of stockholder's equity which is right at my personal threshold. Long-term debt creates interest which chokes out profitability and cash flow. So far this year, Dollar General's operating

This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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