Food Retailers: Food, Value & Services Retailers Weekly: Web traffic still strong at value retailers

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Food Retailers: Food, Value & Services Retailers Weekly: Web traffic still strong at value retailers

increased store density & larger inventory purchases are driving lower product costs,

supply chain & marketing efficiencies that could drive further EBIT margin upside.

Dollar General Corporation (DG)

Our $175 price objective is based on 22x our F2028E (C2027E) EPS estimate. Our PO

assumes that DG stock trades above its 10-year average P/E of 17x. We believe this

valuation is justified given DG's opportunity for margin improvement and benefits from

strategic investments/initiatives, offset by lower traffic vs. peers and continued

profitability pressures.

Upside risks to our PO are a consumer-led recession driving accelerated trade down to

the dollar store space, food inflation driving higher-than-expected comparable sales,

success of international expansion and accelerated store growth as a result.

Downside risks to our PO are increased price competition given the highly competitive

food retail industry, pressures from a macroeconomic slowdown or lower consumer

confidence, SNAP benefit cuts, and volatility in food product costs or gas prices.

Dollar Tree, Inc. (DLTR)

Our $100 PO is based on 13x our F28E/C27E EPS estimate. Our PO assumes that

DLTR's multiple remains below its 10-year historical average of 16-17x given unknown

headwinds associated with its accelerated multi-price point rollout.

confidence, SNAP benefit cuts, volatility in food product costs, and increased wage

pressures.

Upside risks to our PO are a same-store sales acceleration, improved margins supported

by discretionary category growth, accelerated store growth, and a rollback of tariffs.

Dollarama (YDOL / DLMAF)

Our C$220 PO is based on 38x our C2027/F2028E EPS, as we believe DOL should trade