Is Dollar General Corp. overvalued or undervalued?

Jun 25 2025 08:02 AM IST
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As of March 26, 2025, Dollar General Corp. is considered overvalued with a P/E ratio of 22, higher than its peer Dollar Tree, and despite respectable performance metrics, its premium valuation raises concerns.
As of 26 March 2025, Dollar General Corp. has moved from a fair valuation to a very expensive rating. The company is currently overvalued given its P/E ratio of 22, which is higher than its peer Dollar Tree, Inc. at 19.02, and its EV to EBITDA ratio of 11.46, compared to Dollar Tree's 11.35. Additionally, the price to book value stands at 3.24, indicating a premium valuation relative to its book value.

In terms of performance metrics, Dollar General's ROE is 14.98% and ROCE is 12.39%, which are respectable but do not justify the current high valuation. The company's recent stock performance shows a YTD return of 51.61%, significantly outpacing the S&P 500's 2.44%, yet this does not mitigate the overvaluation concern. Overall, Dollar General Corp. is deemed overvalued in the current market context.
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