Dollar General Corp. (DG), Dollar Tree, Inc. (DLTR), Family Dollar Stores, Inc. (FDO): Dollar Stores Still Going Strong

Valuations and metrics

In terms of P/E, there isn’t much to separate the three companies discussed here. Dollar General trades at 19.21 times trailing earnings, versus Dollar Tree, Inc. (NASDAQ:DLTR)’s 19.23 and Family Dollar Stores, Inc. (NYSE:FDO)’s 19.95. Dollar General’s forward P/E of 14.94 looks quite attractive, as does its 19.64% return on equity. Gross margin of around 32% is on par with the industry. Finally, the trailing-12-month operating cash flow of $1.09 billion is well ahead of the competition.

The bottom line

Various indicators have shown recently that the economic recovery so lauded in the media has not benefited everyone equally. In fact, it appears that it is another case of the rich getting richer. Dollar Store earnings support this notion. The discount retail industry is still posting fairly solid growth on the back of continued weak consumer spending. In the industry, Dollar General seems to be delivering the best growth, coupled with a reasonable valuation.

The article Dollar Stores Still Going Strong originally appeared on Fool.com and is written by Daniel James.

Fool contributor Daniel James has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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