Would You Still Hold Dollar General Stock If It Fell 30%?
Dollar General (DG) stock is up 14.0% in a day. The rally reflects robust sales, boosted guidance, and value-seeking shoppers, but big moves like this often invite a tougher question: is the stock truly resilient when markets reverse?
Before judging its downturn reslience, let’s look at where Dollar General stands today.
- Size: Dollar General is a $28 Bil company with $42 Bil in revenue currently trading at $125.29.
- Fundamentals: Last 12 month revenue growth of 5.0% and operating margin of 4.3%.
- Liquidity: Has Debt to Equity ratio of 0.68 and Cash to Assets ratio of 0.04
- Valuation: Dollar General stock is currently trading at P/E multiple of 21.1 and P/EBIT multiple of 14.1
- Has returned (median) -15.7% within a year following sharp dips since 2010. See DG Dip Buy Analysis.
These metrics point to a Weak operational performance, alongside Low valuation – making the stock Risky. For details, see Buy or Sell DG Stock
That brings us to the key consideration for investors chasing this rally: how resilient is DG stock if markets turn south? This is where our downturn resilience framework comes in. Suppose DG stock falls 20-30% to $88 – can investors comfortably hold on? Turns out, the stock saw an impact slightly worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.
2022 Inflation Shock
- DG stock fell 60.9% from a high of $260.44 on 28 October 2022 to $101.83 on 12 October 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $161.22 on 12 March 2024 , and currently trades at $125.29
| DG | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -60.9% | -25.4% |
| Time to Full Recovery | Not Fully Recovered | 464 days |
2020 Covid Pandemic
- DG stock fell 18.4% from a high of $166.88 on 21 February 2020 to $136.10 on 16 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 6 April 2020
| DG | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -18.4% | -33.9% |
| Time to Full Recovery | 21 days | 148 days |
2018 Correction
- DG stock fell 18.3% from a high of $105.34 on 29 January 2018 to $86.05 on 8 March 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 17 August 2018
| DG | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -18.3% | -19.8% |
| Time to Full Recovery | 162 days | 120 days |
Feeling jittery about DG stock? Consider portfolio approach.
Move Beyond Single Stocks With A Multi Asset Portfolio
Individual picks are volatile but diversified assets offset each other. A multi asset portfolio helps you stay the course capture upside and reduce downside.
The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices