Dollar General Dodges Bullet

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Dollar General (NYSE: DG) slid out of harm's way yesterday with only a slight flesh wound, announcing a settlement with the Securities and Exchange Commission (SEC) amid an otherwise respectable set of earnings numbers.

When we checked in with the company back in January, it was to report on the saga of an SEC investigation into some earlier financial restatements. That brouhaha appears to be drawing to a close, and the moral of the story is, as usual, "Pay your way and nothing say." The firm agreed to a tentative deal to pay a $10 million fine and, as usual, it neither admits nor denies wrongdoing. (This Fool shakes his head in disbelief at the sorry state of corporate governance and securities enforcement when companies and individuals would rather cough up huge bucks than utter a single word of contrition.)

In an unrelated matter -- at least, according to corporate PR -- Chief Financial Officer and Executive Vice President James J. Hagan will step down.

Dollar General's earnings were down 4.9% to $0.30 per share for the fourth quarter, in line with what was expected due to charges from restatements and lower markups on merchandise. For the year, sales were up 12.6% to $6.87 billion, while earnings reached $0.89 per share, a 13.6% gain.

At $19.21 per share, the firm trades at a P/E near 22, on management guidance of 10% to 14% earnings growth. That looks too expensive to me, an opinion that seems to be shared by my Fool colleague W.D. Crotty, who recently assessed other discount players with the one-buck moniker, such as 99 Cents Only Stores (NYSE: NDN), Dollar Tree Stores (Nasdaq: DLTR), and Family Dollar (NYSE: FDO). He judged Dollar Tree to be the pick of the litter, but with Wal-Mart (NYSE: WMT) whaling on everyone, this is a sector that's off my watch list.

Join the discussion of the world's biggest retailer in the Fool's Wal-Mart discussion board.

Fool contributor Seth Jayson is hoping for a 30-cent store. He owns no stake in any company mentioned above. View his Fool profile here.