Dollar General Corp. (NYSE:DG)

Return on Assets (ROA)

The Return on Assets shows an initial increase starting from 12.04% in February 2019, followed by a decline to 4.45% by August 2024. After an early peak around April 2021 with a value of approximately 10.63%, ROA exhibits a gradual downward trend over the subsequent quarters. This indicates decreasing efficiency in asset utilization over the analyzed period.

Financial Leverage

Financial Leverage experienced a steady increase from 2.00 in May 2018 to a peak of 5.25 in February 2023. After this peak, a slight reduction is visible, with the ratio dropping to 4.38 by August 2024. The general trend suggests increasing use of debt or other leverage over time, reaching a high leverage position before retrenching somewhat in the latest periods.

Return on Equity (ROE)

Return on Equity increases sharply from an initial figure of 24.77% in February 2019 to a peak of 43.60% in May 2023. Following this peak, ROE declines steadily to 19.50% by August 2024. This pattern aligns with the trends observed in both ROA and Financial Leverage, suggesting that while equity returns initially increased—likely aided by rising leverage—recent periods have seen a marked decrease, implying reduced profitability or challenges impacting equity returns.

The financial data reveals several noteworthy trends over the covered periods in key performance indicators: Net Profit Margin, Asset Turnover, Financial Leverage, and Return on Equity (ROE).

Net Profit Margin

The net profit margin demonstrates an overall decline across the observed timeframe. Initially, margins are reported slightly above 6%, rising modestly to peak around 7.96% in early 2021. However, a consistent downward trend occurs thereafter, culminating near 3.57% by mid-2024. This indicates a reduction in the company’s profitability relative to revenue over recent periods.

Asset Turnover

Asset turnover ratios exhibit some variability with a slight declining tendency. Early values near 1.94 quickly drop to about 1.22 and fluctuate modestly between approximately 1.19 and 1.34 afterwards. The ratio stabilizes near 1.25 to 1.30 in later periods, suggesting relatively steady efficiency in generating sales from assets after initial decreases.

Financial Leverage

Financial leverage consistently increases over time, advancing from an initial measure of 2.00 to approximately 4.38 by mid-2024. This upward trajectory signals a growing reliance on debt or leverage to finance the company’s assets, effectively doubling leverage levels across the dataset.

Return on Equity (ROE)

ROE trends upwards initially, rising from around 24.77% to a peak exceeding 43% by mid-2023. Following this peak, there is a marked decline back to approximately 19.5% by mid-2024. The initial increase in ROE, despite rising leverage, suggests effective use of equity, but the subsequent drop may reflect deteriorating profitability or operational efficiency.

Overall, while financial leverage shows a marked increase, efficiency as measured by asset turnover remains relatively stable after an early decline. Profitability metrics—both net profit margin and ROE—display a peak followed by notable declines, potentially indicating emerging pressures on profitability and shareholder returns in the most recent periods.

Tax Burden

The tax burden ratio remained consistently stable at approximately 0.78 from May 2019 through August 2024, indicating a steady portion of pre-tax income retained after taxes with minimal fluctuations.

Interest Burden

The interest burden ratio demonstrated a slight declining trend beginning around May 2019 at 0.95, gradually decreasing to 0.86 by August 2024. This suggests a gradual increase in interest expenses relative to earnings before interest and taxes over time, potentially signaling rising interest costs or higher debt financing.

EBIT Margin

EBIT margin showed an initial improvement from around 8.25% in May 2019 to a peak exceeding 10% between mid-2020 and early 2021. However, after this peak, a steady decline ensued with the margin falling to approximately 5.32% by August 2024. This indicates that operating profitability after interest and taxes weakened notably in the later periods.

Asset Turnover

Asset turnover ratio initially decreased from 1.94 in May 2019 to about 1.19 by August 2019, followed by a gradual recovery and stabilization near the range of 1.25 to 1.3 through 2020 to 2024. This pattern suggests an early reduced efficiency in generating sales from assets which then moderately improved and maintained a moderate efficiency level in recent years.

Financial Leverage

Financial leverage increased steadily from 2.00 in May 2018 to a peak of approximately 5.25 by February 2023 before declining slightly to 4.38 by August 2024. The rising leverage generally indicates an increasing use of debt financing, contributing to greater risk and potential amplification of returns.

Return on Equity (ROE)

ROE exhibited a marked upward trend from roughly 24.77% in May 2019, peaking at 43.6% in May 2023. Thereafter, it declined significantly to 19.5% by August 2024. This pattern reflects an initial strong enhancement in shareholder returns coinciding with higher financial leverage and operating efficiency, followed by a notable reduction possibly due to decreasing profitability and declining margins.

Net Profit Margin

The net profit margin data begins from May 3, 2019, showing a margin of 6.2%. Following this, there was a general upward trend reaching a peak of approximately 7.96% by April 30, 2021. After this peak, the margin experienced a gradual decline through the subsequent periods, decreasing steadily to 3.57% by August 2, 2024. This indicates an initial improvement in profitability followed by a sustained decline over the latest observed periods.

Asset Turnover

Asset turnover ratio shows an initial value of 1.94 in May 3, 2019, which sharply declined to around 1.22 over the next few quarters until May 1, 2020. Post this decline, the ratio stabilized in the range of approximately 1.19 to 1.34 with minor fluctuations. The ratio exhibited a slight decreasing trend towards the latest periods, ending at 1.25 as of August 2, 2024. This suggests relatively consistent efficiency in utilizing assets to generate sales, albeit at a lower level compared to the starting point.

Return on Assets (ROA)

Return on assets commenced at 12.04% on May 3, 2019, then declined sharply to about 7.41% by February 1, 2019, followed by a resurgence increasing to a peak of 10.63% around April 30, 2021. After reaching this peak, ROA began a gradual descent, declining consistently over subsequent periods to reach 4.45% by August 2, 2024. This pattern mirrors the net profit margin trend, reflecting an initial improvement in asset profitability followed by a notable reduction in later periods.

Summary of Trends

The data reflects a general pattern where profitability metrics (net profit margin and return on assets) experience growth until early 2021, followed by a marked and continuous decline through mid-2024. The asset turnover ratio, indicative of operational efficiency in asset usage, decreased sharply at the beginning of the series but then stabilized with minor fluctuations over time. The simultaneous decline in profitability metrics and relatively stable asset turnover in recent years suggests challenges in maintaining profit generation despite consistent asset usage efficiency.

Tax Burden

The tax burden ratio has remained largely stable over the reported periods, consistently hovering around 0.78. This suggests a relatively steady effective tax rate impacting the company's earnings, with very minimal fluctuations observed from 2019 onwards.

Interest Burden

The interest burden ratio showed strong consistency initially, maintaining a level near 0.95 to 0.96 through to early 2021. Thereafter, a clear declining trend emerges, falling gradually from 0.94 in mid-2021 to about 0.86 by mid-2024. This downward movement may indicate increasing interest expenses relative to earnings before interest and taxes, implying a potential rise in debt cost or leverage over time.

EBIT Margin

EBIT margin exhibited a positive trend from early 2019, starting at around 8.25% and peaking near 10.67% in mid-2021. Following this peak, the margin experienced a continuous downward trajectory, decreasing steadily to approximately 5.32% by mid-2024. The initial margin improvement suggests enhanced operating efficiency or pricing power, whereas the subsequent decline could reflect pressure on profitability from rising costs, competitive factors, or operational challenges.

Asset Turnover

Asset turnover ratio showed some volatility early on, diminishing sharply from 1.94 in May 2018 to roughly 1.22 around early 2019. From that point, it stabilized and exhibited mild fluctuations between 1.19 and 1.34, with a general slight downward trend observable from mid-2021 to mid-2024. This pattern indicates a more efficient use of assets initially, followed by a period of relative consistency and modest decline in asset utilization efficiency over time.

Return on Assets (ROA)

ROA mirrored the patterns seen in EBIT margin and asset turnover. Starting at over 12% in 2018, it declined significantly to around 7.5% in early 2019. Subsequently, ROA increased steadily, reaching a peak above 10% in mid-2021, before entering a prolonged decline phase, falling to below 4.5% by mid-2024. This indicates that the company's capability to generate profits from its assets improved through 2021 but weakened thereafter, reflecting challenges in maintaining asset profitability in recent periods.

Tax Burden

The tax burden ratio has remained relatively stable over the analyzed periods, consistently around 0.78 with a minor variation between 0.77 and 0.79. This indicates a steady effective tax rate, with no significant fluctuations affecting the company's profitability in this regard.

Interest Burden

The interest burden ratio exhibits a gradual downward trend, starting close to 0.95 in early periods, maintaining around 0.95 to 0.96 for several quarters, then declining in the most recent quarters to approximately 0.86. This suggests a slight increase in interest expense relative to earnings before interest and taxes, indicating marginally higher financial costs or borrowing impact over time.

EBIT Margin

EBIT margin displays a noticeable fluctuation with a peak around 10.67% followed by a continuous decline. Initial values around 8.2% increased to nearly 10.7% but subsequently decreased sharply to about 5.3% in the latest period. This suggests that operating profitability improved significantly but has weakened substantially in the most recent quarters, which may reflect rising costs or pricing pressures.

Net Profit Margin

The net profit margin follows a pattern similar to the EBIT margin, increasing modestly from approximately 6.1% to nearly 8.0%, then experiencing a steady decline down to roughly 3.6% most recently. This decline in net margin implies decreasing overall profitability after accounting for all expenses, including interest and taxes, further highlighting margin compression challenges.