Dollarama vs Dollar General Which Is More Attractive?

Dollarama and Dollar General are two leading retail companies in the discount store industry, offering a wide range of affordable everyday items. Both companies have seen steady growth and success in recent years, but there are key differences in their business models. Dollarama is a Canadian company, focused on providing value-focused products in smaller store formats, while Dollar General is a larger American chain with a wider assortment of merchandise. Investors may want to consider factors such as market positioning, financial performance, and growth potential when comparing Dollarama and Dollar General stocks.

Dollarama or Dollar General?

When comparing Dollarama and Dollar General, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Dollarama and Dollar General.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Dollarama has a dividend yield of 0.26%, while Dollar General has a dividend yield of 3.01%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Dollarama reports a 5-year dividend growth of -4.10% year and a payout ratio of 8.30%. On the other hand, Dollar General reports a 5-year dividend growth of 9.39% year and a payout ratio of 38.84%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Dollarama P/E ratio at 36.18 and Dollar General's P/E ratio at 12.91. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Dollarama P/B ratio is 31.64 while Dollar General's P/B ratio is 2.35.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Dollarama has seen a 5-year revenue growth of 0.81%, while Dollar General's is 0.82%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Dollarama's ROE at 135.38% and Dollar General's ROE at 18.85%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $99.25 for Dollarama and $77.94 for Dollar General. Over the past year, Dollarama's prices ranged from $67.34 to $109.74, with a yearly change of 62.96%. Dollar General's prices fluctuated between $72.12 and $168.07, with a yearly change of 133.04%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.