Brought to you by Validea.com, the Value Stock of the Week provides a detailed report on a company that scores well based on the stock selections strategies of Wall Street’s best investors. Using Validea, investors can analyze over 6,000 US stocks through 12 different guru-based models and get individual reports on each company. ValueWalk has a content agreement with Validea.
Access Validea’s Equity Analysis, Guru Screens and Model Portfolios risk-free today.
Stock of the week for 02/23/2015: Dollar General (DG)
Discount retailer Dollar General sells food, snacks, health and beauty aids, cleaning supplies, basic apparel, housewares, seasonal items, and more. With more than 11,700 stores in 40 states, Dollar General has more retail locations than any retailer in America. It has a market cap of $21.5-billion (U.S.).
The company has a return on capital using the Joel Greenblatt-based model’s EBIT/tangible capital employed metric of 51.8 per cent.
It has grown EPS at a 36-per-cent clip over the long term (using an average of 3, 4 and 5yr EPS growth rates), part of why it gets strong interest from Peter Lynch model. The Lynch model also likes its 0.59 P/E-to-growth ratio. It has debt/equity ratio of 52 per cent, which the Lynch model thinks is reasonable.
Dollar General has averaged net profit margin of 5.7 per cent over past three years, which the Kenneth Fisher-based model likes.
It has a 19 per cent return on equity and has averaged a 15.8-per-cent return on retained earnings (those not paid out as dividends) over past decade, which the Warren Buffett-based model likes.
It also has a 72 relative strength over past 12 months.
Dollar General could be in for short term volatility as its bid for Family Dollar plays out.
Click here for a complete breakdown of Validea’s investing guru report.