DG was a “reasonably buy” at $192.43 back in Feb ’22. It probably is finally a table pounder now?

Well, that does presuppose that there has been no change to the business. They are definitely going through a rough patch. EPS was about $7 in the last four quarters rather than the roughly $11 that might otherwise have been expected. (it also presupposes that my old post had some merit!)

The question is whether the currently lower profitability patch is transient, mostly transient, or permanent. I am going for "mostly transient".

Their net profit margins were around 6.2% after the TCJA tax cuts but before the pandemic bump. This year is looking more like 3.9%. I perhaps optimistically expect to see numbers over 5.5% soon enough. Sales per share continues its happy march, so that kind of rebound would be very good for earnings...and presumably the price.

Jim

Falling Knives FAQ

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