2024-03-20 05:50:06 ET
Summary
- Despite Dollar General YTD outperformance (+8% versus +7% for the S&P 500), a gradual recovery closer to historical margins over the long term could still yield +20% upside potential.
- The market seems to be overemphasizing short-term headwinds and failing to properly price in Dollar General's potential.
- At current prices, Dollar General is priced at historical CPI growth on margins below the historical average in the long term. Terminal growth also falls short of historical same-store sales.
- Dollar General has a track record of consistently strong operational performance, and the reappointment of the former CEO adds credibility to the effectiveness of the "Back to Basics" turnaround plan.
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Dollar General: 'Back To Basics' Turnaround Plan May Prove That The Stock Is Still Trading At A Large Discount