Dollar General 'Still A Good Standalone Company'

In a recent report, Barclays analysts took a look at Dollar General Corp. (NYSE: DG) now that the company and its shareholders have been forced to regroup following a failed takeover bid for Family Dollar Stores, Inc. (NYSE: FDO). Dollar General intends to move forward with its growth plan despite its inability to close the Family Dollar deal.

Alternative Growth Paths

The takeover bid for Family Dollar was just the latest growth initiative at Dollar General. Analysts point to increasing cooler doors, raising shelf heights and rolling out tobacco products as three other recent growth-drivers.

Analysts believe that the company demonstrated that it can still achieve meaningful growth in 4Q14. According to the report, "Sales in 4Q14 were driven by efforts to: 1) improve the value of the merchandise offering, 2) bring in apparel and home merchandise that combines value and price effectively, and 3) implement an on-line coupon center, funded by vendors, which has been well-received by customers."

Plans For Streamlining Operations

After the initial success of the coupon center, Dollar General plans to use the data they have collected to create more targeted promotions for its customers.

In addition, the company plans to refine individual store merchandise selection to match local demand. Finally, the company plans to increase its square footage growth rate in 2016 from 6 percent to 7 percent.

Stock Outlook

Analysts call Dollar General a "great" company, but they have concerns about growth initiatives weighing on earnings in the near-term. Barclays lowered its 2016 earnings per share forecast for Dollar General from $4.60 to $4.43.

However, analysts raised their target price for the stock from $63 to $74 on the strength of the company's recently-announced $1.3 billion 2015 share buyback plan. Barclays has an Equal-Weight rating on Dollar General.