Why Dollar General May Be a Good Buy Despite Earnings Miss

Discount retailer Dollar General (NYSE:DG) has been a fairly resilient business to invest in of late, even amid inflation. The company's stores offer low-priced items and they target price-conscious consumers who may need to stretch their budgets. The stores stock many day-to-day needs, including groceries, household items, beauty products, clothing, and other discounted products.

Last week, the company released its fourth-quarter results, which demonstrated the strength of Dollar General's business. In Q4, the company's same-store sales rose 5.7%, which is slightly lower than the 6.23% that analysts were looking for. However, that's still a solid growth rate at a time when many businesses are struggling. Revenue totaling $10.2 billion was up an impressive 18% year over year. Earnings per share of $2.96 only missed Wall Street expectations by three cents.

Overall, the company's business looks to be in good shape, with CEO Jeff Owen saying that, "we're an all-weather brand, and we've shown over the last three decades how we can serve that customer in any economic environment."

With 19,000-plus stores, the company is one of the largest retailers in the U.S., and it's in a great position to take advantage of competitors raising their prices. It could be a good buy, especially as more consumers flock to the company's stores in an effort to save money.

The stock has made for a fairly stable investment over the past year, declining by less than 2% while the S&P 500 has fallen by 10%. And at 21 times earnings, it isn't overly expensive.