No. of Recommendations: 6
Cross-posts from the Falling Knives board, since this is the more logical place to put this discussion:
https://www.shrewdm.com/MB?pid=842885149and
https://www.shrewdm.com/MB?pid=557151371:
“We made important progress on our Back to Basics plan in the second quarter,” said Todd Vasos, Dollar General’s chief executive officer. “However, despite advancing several of our operational goals and driving positive traffic growth, we are not satisfied with our financial results, including top line results below our expectations for the quarter.”It's pretty easy to see why the shares are down $30, to $94. Same store sales were up 0.5%, despite 2.5% inflation, so falling behind in real terms. Shift to lower margin food continues. Theft getting worse, not better. Projected full year EPS of $5.50 to $6.20, compared to its previous expectation of $6.80 to $7.55. Even at $93/share, if they hit the midpoint of their 2024 target, $5.85, that represents 16 times earnings. You have to really believe that Vasos is going to be able to turn things around to want this investment, even at the new, lower price, and I don't see any reason to believe that. Give me some reason to believe, or a price more like 10 times earnings ($60?) and I would think about it. But I am closer to dealraker's pessimistic view, too close to Walmart, and that will get worse as they keep (for some reason?) expanding their store count.
dtb
