As of May 29, 2025, Dollar General Corp's estimated intrinsic value ranges from $72.10 to $127.72 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $127.72 | +30.6% |
| Discounted Cash Flow (5Y) | $112.57 | +15.1% |
| Dividend Discount Model (Multi-Stage) | $99.68 | +2.0% |
| Dividend Discount Model (Stable) | $79.36 | -18.8% |
| Earnings Power Value | $72.10 | -26.3% |
Is Dollar General Corp (DG) undervalued or overvalued?
With the current market price at $97.77, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Dollar General Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.58 | 0.68 |
| Cost of equity | 6.5% | 8.7% |
| Cost of debt | 4.6% | 7.0% |
| Tax rate | 21.8% | 21.9% |
| Debt/Equity ratio | 0.28 | 0.28 |
| After-tax WACC | 5.9% | 8.0% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $113 | $30,065M | 82.8% |
| 10-Year Growth | $128 | $33,399M | 69.4% |
| 5-Year EBITDA | $69 | $20,511M | 74.8% |
| 10-Year EBITDA | $84 | $23,891M | 57.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,436M |
| Discount Rate (WACC) | 8.0% - 5.9% |
| Enterprise Value | $17,983M - $24,345M |
| Net Debt | $5,306M |
| Equity Value | $12,678M - $19,039M |
| Outstanding Shares | 220M |
| Fair Value | $58 - $87 |
| Selected Fair Value | $72.10 |
| Metric | Value |
|---|---|
| Market Capitalization | $21505M |
| Enterprise Value | $26810M |
| Trailing P/E | 28.22 |
| Forward P/E | 18.24 |
| Trailing EV/EBITDA | 5.85 |
| Current Dividend Yield | 174.54% |
| Dividend Growth Rate (5Y) | 9.89% |
| Debt-to-Equity Ratio | 0.28 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $38.32 |
| Discounted Cash Flow (5Y) | 25% | $28.14 |
| Dividend Discount Model (Multi-Stage) | 20% | $19.94 |
| Dividend Discount Model (Stable) | 15% | $11.90 |
| Earnings Power Value | 10% | $7.21 |
| Weighted Average | 100% | $105.51 |
Based on our comprehensive valuation analysis, Dollar General Corp's weighted average intrinsic value is $105.51, which is approximately 7.9% above the current market price of $97.77.
Key investment considerations:
Given these factors, we believe Dollar General Corp is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.