Stock Analysis on Net

Dollar General Corp. (NYSE:DG)

$22.49

This company has been moved to the archive! The financial data has not been updated since August 29, 2024.

Enterprise Value to FCFF (EV/FCFF)

Microsoft Excel

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Free Cash Flow to The Firm (FCFF)

Dollar General Corp., FCFF calculation

US$ in thousands

Microsoft Excel
12 months ended: Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019
Net income
Net noncash charges
Change in operating assets and liabilities
Net cash provided by operating activities
Cash paid for interest, net of tax1
Interest costs capitalized, net of tax2
Purchases of property and equipment
Proceeds from sales of property and equipment
Free cash flow to the firm (FCFF)

Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).


The financial data reveals notable fluctuations in key cash flow metrics over the six-year period. Both operating cash flow and free cash flow to the firm (FCFF) exhibit distinct trends that warrant detailed examination.

Net cash provided by operating activities
There was an overall increase from approximately $2.14 billion in early 2019 to a peak of about $3.88 billion in early 2021. This suggests a significant improvement in core operational cash generation during this period. However, the figure then declined to roughly $2.87 billion in early 2022 and further dropped to about $1.98 billion by early 2023. In the most recent period, early 2024, operating cash flow rebounded to approximately $2.39 billion, indicating some recovery but still below earlier peak levels.
Free cash flow to the firm (FCFF)
FCFF followed a similar yet more pronounced pattern. Starting at around $1.49 billion in early 2019, it increased to nearly $2.95 billion in early 2021, more than doubling the initial value. This peak was followed by a sharp decline to about $1.93 billion in early 2022 and then a significant drop to roughly $584 million in early 2023, representing the lowest point over the observed years. By early 2024, FCFF improved to nearly $984 million, indicating partial recovery but remaining substantially lower than the earlier peak and the initial values in 2019 and 2020.

Analysis of these trends suggests that while the company markedly enhanced its cash flow generation capabilities through operations until early 2021, subsequent years saw declines likely due to increased expenditures, capital investments, or other financial pressures. The pronounced drop in FCFF relative to operating cash flow may indicate rising capital expenditures or other investment activities that reduced free cash available. The partial recovery in the latest period points to possible improved operational efficiency or moderated investment outflows but does not fully restore the strong cash generation level experienced in early 2021.


Interest Paid, Net of Tax

Dollar General Corp., interest paid, net of tax calculation

US$ in thousands

Microsoft Excel
12 months ended: Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019
Effective Income Tax Rate (EITR)
EITR1
Interest Paid, Net of Tax
Cash paid for interest, before tax
Less: Cash paid for interest, tax2
Cash paid for interest, net of tax
Interest Costs Capitalized, Net of Tax
Interest costs capitalized, before tax
Less: Interest costs capitalized, tax3
Interest costs capitalized, net of tax

Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).

1 See details »

2 2024 Calculation
Cash paid for interest, tax = Cash paid for interest × EITR
= × =

3 2024 Calculation
Interest costs capitalized, tax = Interest costs capitalized × EITR
= × =


The analysis of the effective income tax rate (EITR) over the reported periods reveals relative stability, with values oscillating narrowly between 21.6% and 22.5%. This suggests consistent tax expense management in relation to pre-tax earnings, indicating no significant changes in tax strategy or tax environment impact across the six-year span.

Examining the cash paid for interest, net of tax, a clear upward trend is apparent. Starting at $76,743 thousand in the earliest period, the amount increases steadily each year, reaching $276,339 thousand by the most recent period. This substantial rise, particularly marked after 2022, may indicate increased borrowing costs, higher debt levels, or changes in interest rates impacting the company's financing expenses.

Interest costs capitalized, net of tax, exhibit more variability compared to other items. The figure began at a modest $2,897 thousand in 2019, decreased to a low of $78 thousand in 2021, and then rose sharply to $9,800 thousand by 2024. Such fluctuations could suggest changing capital investment activities or shifts in the company's policy on capitalizing borrowing costs. The peak in 2024 may reflect intensified capital projects or revised accounting practices in recognizing interest costs.

Effective Income Tax Rate (EITR)
Remained stable with minor fluctuations between 21.6% and 22.5%, indicating consistent tax expense relative to income over time.
Cash Paid for Interest, Net of Tax
Displayed a steady upward trajectory from $76,743 thousand to $276,339 thousand, highlighting increased interest-related cash outflows.
Interest Costs Capitalized, Net of Tax
Varied significantly, with a decline until 2021 followed by a substantial rise, pointing to changes in capital expenditure levels or capitalization policies.

Enterprise Value to FCFF Ratio, Current

Dollar General Corp., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel
Selected Financial Data (US$ in thousands)
Enterprise value (EV)
Free cash flow to the firm (FCFF)
Valuation Ratio
EV/FCFF
Benchmarks
EV/FCFF, Competitors1
Costco Wholesale Corp.
Target Corp.
Walmart Inc.
EV/FCFF, Sector
Consumer Staples Distribution & Retail
EV/FCFF, Industry
Consumer Staples

Based on: 10-K (reporting date: 2024-02-02).

1 Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.


Enterprise Value to FCFF Ratio, Historical

Dollar General Corp., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel
Feb 2, 2024 Feb 3, 2023 Jan 28, 2022 Jan 29, 2021 Jan 31, 2020 Feb 1, 2019
Selected Financial Data (US$ in thousands)
Enterprise value (EV)1
Free cash flow to the firm (FCFF)2
Valuation Ratio
EV/FCFF3
Benchmarks
EV/FCFF, Competitors4
Costco Wholesale Corp.
Target Corp.
Walmart Inc.
EV/FCFF, Sector
Consumer Staples Distribution & Retail
EV/FCFF, Industry
Consumer Staples

Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).

1 See details »

2 See details »

3 2024 Calculation
EV/FCFF = EV ÷ FCFF
= ÷ =

4 Click competitor name to see calculations.


Enterprise Value (EV)
The enterprise value demonstrates an overall upward trend from 2019 through 2022, increasing steadily from approximately $33.1 billion to around $56.4 billion. However, in the subsequent years, the value declines sharply to about $51.7 billion in 2023 and further to approximately $39.6 billion in 2024, indicating a significant contraction after the peak.
Free Cash Flow to the Firm (FCFF)
Free cash flow exhibits fluctuations across the period. It rises from approximately $1.5 billion in 2019 to a peak of nearly $3.0 billion in 2021, marking strong cash generation. Following this peak, FCFF declines to roughly $1.9 billion in 2022, then drops dramatically to about $584 million in 2023, before partially recovering to close to $984 million in 2024. This pattern suggests volatility with a notable decrease after 2021.
EV/FCFF Ratio
The EV to FCFF ratio shows significant variability. It starts at a moderate level of 22.2 in 2019, slightly increases to 25.2 in 2020, then decreases to the lowest point of 16.16 in 2021, corresponding with the peak in free cash flow. Subsequently, the ratio sharply increases to 29.27 in 2022, and then surges to extremely high values of 88.52 in 2023 and 40.23 in 2024. This indicates rising enterprise value relative to free cash flow initially, followed by disproportionate declines in cash flow compared to enterprise value, leading to stretched valuation multiples.