Is Dollar General Corporation (DG) overvalued?
On Equity Rank's model estimate, DG trades 28% below its fair value. Dollar General Corporation (DG) last closed at $133.75; the multi-method model fair value is $185.20.
| Price | Model fair value | Price vs model |
|---|---|---|
| $133.75 | $185.20 | 28% below |
What the answer rests on
- 6 of 11 valuation methods put DG's value above its price and 5 put it below, so the methods disagree.
- To justify today's price, DG's free cash flow would need to grow about -7.1% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 78.1% a year.
- DG trades at 18.4 times its last year's earnings, against a median of 24.3 for 7 profitable Discount Retail companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 51% below to 26% below the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind DG's fair value · What prices assume · Other companies