Dollar General is one of the rare stocks that has managed to hold its ground while the broader market continues to experience significant volatility. With investors increasingly concerned about rising tariffs, slowing growth, and shifting consumer behavior, one big question stands out: Is Dollar General a safe stock to buy right now?
In this video, I’m going to dive deep into Dollar General’s financials, competitive positioning, and macroeconomic challenges to help you determine if it deserves a spot in your portfolio. I’ll also be walking you through my proprietary discounted cash flow model to reveal what I believe is the company’s true intrinsic value—based on realistic growth expectations and current economic conditions.
So stick around, because by the end of this video, you’ll have a clear understanding of where Dollar General stands, where it's headed, and whether it's a buy, hold, or sell.
Dollar General Stock Performance Overview
Dollar General’s stock is currently trading around $90 per share, well above where it started the year at $75. That’s an impressive performance, especially considering how many other retail stocks have struggled during this recent market downturn.
In an environment where inflation continues to chip away at household budgets and rising interest rates have compressed valuations, Dollar General has managed to show relative strength. That’s partly because it’s seen as a "recession-resistant" business—catering primarily to price-sensitive, lower-income consumers who tend to tighten their belts during economic uncertainty.
But just because a stock is defensive doesn’t necessarily make it a good investment. We still need to look under the hood.
Revenue Growth & Strategic Shifts
Over the last decade, Dollar General has done a great job growing its top line. Trailing twelve-month revenue now stands at around $40 billion, a significant increase from where it was just five years ago.
But recently, the company has been forced to make some strategic pivots. In 2024, management announced plans to close underperforming stores and to pull back on its self-checkout strategy, which had led to rising shrink—industry code for theft—and customer dissatisfaction. The plan now is to redirect efforts toward opening new locations in stronger-performing markets.
This could be a smart move in terms of operational efficiency, but it also speaks to the limits of Dollar General’s low-cost model. When you're dealing with extremely thin margins and cost-conscious consumers, even small missteps can have ripple effects.
Tariffs & Inflation: A Big Headwind
Now, let's talk about the elephant in the room: tariffs.
The U.S. has been ramping up tariffs across a wide range of imports, and this is hitting Dollar General particularly hard. Many of the products it sells are imported goods, which means the cost of sourcing inventory is going up. At the same time, its core customer base—low-income households—is the least equipped to absorb price increases.
So Dollar General faces a delicate balancing act:
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Raise prices too much, and risk losing customers to competitors like Walmart, Aldi, or even local dollar stores.
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Don’t raise prices, and margins get crushed.
It’s also worth remembering that tariffs are essentially a consumption tax—the burden ultimately falls on the consumer. And Dollar General’s customer is already facing pressure from multiple angles: higher gas prices, rent, healthcare costs, and now food and household essentials.
Margins, Profitability & ROIC
Let’s now shift to profitability.
Over the last 12 months, Dollar General generated $3 billion in operating cash flow on $40 billion in revenue—translating to a margin of less than 10%. That’s not surprising for a discount retailer, but it does mean the business doesn’t have a lot of room to absorb additional cost pressures.
Even more concerning is the decline in return on invested capital (ROIC). Since 2021, ROIC has been steadily falling—now sitting at 8.13%. That’s a clear sign that the business is becoming less efficient at turning capital into profits.
This decline may be due in part to saturation in its existing markets and the operational difficulties tied to managing a vast network of stores with minimal staffing. Anyone who’s been in a Dollar General recently knows what I mean—the stores are often disorganized, understaffed, and not exactly customer-friendly. That might have been okay pre-2019, but in a post-COVID economy where consumer expectations have shifted, it’s become more of a liability.
Valuation: Discounted Cash Flow Analysis
Now, let’s get into the valuation.
I built a discounted cash flow model starting with the company’s most recent free cash flow number—about $690 million in 2024. Wall Street analysts expect that to rise significantly, hitting $1.42 billion by 2029. In my model, I’m forecasting that those free cash flows continue to grow steadily through 2035 and beyond, though at a conservative pace that accounts for rising costs and competitive pressures.
Here are the assumptions I’m using:
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Discount rate: 6.92%
This includes a cost of debt at 7% and a cost of equity at 6.6%
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Beta: 0.43
This indicates the stock is relatively uncorrelated with the broader market—another reason why some investors see it as a defensive play
After discounting all future cash flows, I arrive at a present value of approximately $38 billion for the company.
Given Dollar General’s current market cap of $15.9 billion and significant debt load of $17.5 billion, my model produces a fair value estimate of $95.52 per share.
With the stock currently trading at $89.89, that implies it’s trading slightly below intrinsic value—but not enough to represent a clear buying opportunity.
Valuation Multiples
Looking at valuation multiples, Dollar General is trading at a forward P/E of 14.6, which is near the lowest levels we've seen in the past three years. On the surface, that might look cheap—but context matters.
You're not getting a fast-growing, high-margin business here. You’re getting a company with:
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Declining ROIC
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Slowing revenue growth
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Macro headwinds from tariffs
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And a challenged in-store experience
So even though the multiple looks low, I wouldn’t say the stock is necessarily “cheap.”
Final Verdict: Buy, Hold, or Sell?
So, after looking at the financials, the macro backdrop, and the valuation, is Dollar General a buy?
At current prices, I would rate Dollar General as a Hold.
There’s no major margin of safety here. The valuation is fair, but not compelling. And while the business is relatively stable and uncorrelated with broader economic cycles, the internal challenges—declining efficiency, thin margins, and weak customer experience—make it hard to justify a bullish stance right now.
That said, I wouldn’t be in a rush to sell either. If you already own shares, it might make sense to hold and wait for either a better valuation or signs of operational improvement. But if you're looking for new investments, there are likely better opportunities out there.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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