Dollar General Earnings: Shares Fall Amid Weak Top-Line Gains, Intensifying Promotional Environment

We plan to lower our fair value estimate for narrow-moat Dollar General by around 10% following disappointing second-quarter results and a depressed outlook as the firm grapples with weak demand from its core low-income consumers. Despite the cut to our fair value estimate, we view the shares as significantly undervalued and consider the retailer’s competitive advantage intact, as impressive store density and distribution scale allow Dollar General to serve rural towns more cost-effectively than peers.