Is Dollar General (DG) a value stock right now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies. That's why we constantly look at the latest trends in value, growth and momentum to find strong companies for our readers.

Given these trends, value investing is clearly one of the most popular ways to find strong stocks in any market. Value investors rely on traditional forms of analyzing key valuation metrics to find stocks that they believe are undervalued and have room for gains.

In addition to the Zacks Rank, investors looking for stocks with specific traits can use our Style Scores system. Of course, value investors will be particularly interested in the “Value” category of the system. Stocks with “A” grades for Value and high Zacks Ranks are some of the best value stocks available today.

One company to keep an eye on right now is Dollar General (DG). DG currently has a Zacks Rank of #2 (Buy) and an A for Value. The stock is currently trading at a P/E ratio of 13.16. For comparison: the industry has an average P/E ratio of 28.92. Over the last 52 weeks, DG's Forward P/E has been as high as 21.73 and as high as 10.58, with a median of 17.26.

DG also has a PEG ratio of 2.25. This popular number is similar to the widely used P/E ratio, but the PEG ratio also takes into account a company's expected EPS growth rate. DG's PEG compares to its industry's average PEG of 3.22. Over the last 52 weeks, DG's PEG has been as high as 2.95 and as low as 1.68, with a median of 2.41.

Value investors also often use the P/E ratio. This ratio is determined by dividing the share price by the company's sales. This is a preferred metric because sales cannot really be manipulated and therefore sales are often a truer performance indicator. DG has a P/S ratio of 0.45. This compares to its industry's average P/E ratio of 0.65.

Finally, we should also recognize that DG has a P/CF ratio of 7.76. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash prospects. DG's current P/CF looks attractive when compared to its industry's average P/CF of 28.53. DG's P/CF has been as high as 14.12 and as low as 7.47, with a median of 11.45, over the past year.

These are just a few of the key metrics included in Dollar General's strong Value rating, but they help show that the stock is likely undervalued right now. Considering its strong earnings outlook, DG appears to be an impressive value stock right now.

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