Subject: Re: DG on sale today
One I've been looking at, what are your thoughts on eps growth % over the next 5 years and terminal multiple?
I took $10 eps x 8% @ 5 years x 20 multiple giving s share price of 293 about 12.6% compounded from here.
Eps seems to have stalled somewhat in the last 3 years which explains the slip in multiple from 25 to 15 ish.

Have a look at the other "OT DG" thread https://www.shrewdm.com/MB?pid...
Most of my thoughts are there, most recently posts 3327&3328, and good thoughts from many others.

I don't view it as EPS having gone flat. If so, you certainly wouldn't want to assume an exit multiple of 20 : )
Rather, I think it's better viewed as a situation of poor comps: they had a nice pandemic boost which is going away, and this year is a bit below average.
Ignore that "hump" in sales and profits, and I believe the overall trend remains for growth in sales per share.
Sales per share grew at around inflation + 10%/year in the last 5 years. To be a bit more conservative I'm pencilling in (WAG) inflation + 6.5%/year in the next five.
I expect net profit margins to hold up at (almost) their historical levels of around 6%. Perhaps a small drop due to rising real interest rates, perhaps not.
(if the interest bill becomes a material issue for them, they can simply pay off some debt...they make a LOT of money)

My DG position is now #2 in my portfolio after Berkshire. (though quite a gap between the two!)
That doesn't mean it's a good idea, not by a long shot.

I imagine their upcoming quarterly release is likely to be weak, with new weak surprises. They have certainly telegraphed it enough. Thursday before open I think?
But I don't speculate on what that will do to their share price short term, nor do I much care.
Nvidia blew it out of the park but the stock price is down. Mr Market often does the reverse of what you think : )

Jim